How Hedge Fund Lost 1.2 Million Dollars In Phone Scam


infosecINFORMATION SECURITY. This is an issue that the world is currently grappling with,even becoming a topic of discussion during the G8 meeting in Germany. Firms too often see cyber security as a technical issue and sometimes fail to adequately take measures to manage risks emerging due to human error.

This is the case with a London hedge fund that lost $ 1.2 Million to a phone scam. According to Bloomberg, the company’s finance officer was about to leave the office one Friday afternoon in 2013 , when he received a call from an individual purporting to be the Company’s bank. The individual went on to allege suspicious activities on the company’s bank account. The caller then asked the CFO to use the bank’s smart card security system to generate codes for the caller to cancel 15 suspicious payments.

The CFO later discovered the following week, $1.2 million was missing from the company’s account, only to call the bank and discover no such phone calls were made from the bank. The CFO later lost his job, and the hedge fund has since sued him for failure to protect the company’s assets. The hedge fund is not the only target of such a scheme now being called the “Friday Afternoon Scam” where individuals masquerading as banks staff ask to access user accounts.  The court case continues even as this presents an interesting threat to information security.