The Securities and Exchange Commission (SEC) has settled charges against Equiniti, a transfer agent, for losing clients’ money. Equiniti has paid $850,000 in a civil penalty to settle the charges.
According to the SEC, Equiniti was the target of a “threat actor” who pretended to be an issuer employee and instructed the company, then known as American Stock Transfer & Trust Company, to send $6.6 million of client funds to Hong Kong.
The company was able to recover $2.6 million of the money and fully reimbursed its customers.
In a separate event, another threat actor used stolen social security numbers to set up accounts linked to a real client, who then transferred $1.9 million to external accounts. The company was able to recover $1.6 million for this event.
Monique Winkler, Director of the SEC’s San Francisco Regional Office, said American Stock Transfer failed to provide the necessary safeguards to protect customer funds, and these types of intrusions have become a “near-constant threat.
“As threat actors become more sophisticated in the cyber space, transfer agents must act to implement and maintain effective safeguards and procedures around client assets.”
According to its website, Equiniti serves more than 6,700 clients, including 35% of the S&P 500 and 49% of the FTSE UK 100.