FINRA Slaps Lincoln Fin'l For Major Security Lapse
February 28, 2011
Lincoln Financial Group says it took swift action to safeguard private consumer information and beef up its security policies, after it discovered vulnerabilities in a Web-based system that stored consumer account records for two of its business units.
Those weaknesses came to full light after the Financial Industry Regulatory Authority imposed fines totaling $600,000 on Lincoln Financial Securities and Lincoln Financial Advisors Corp. because of the previous security lapses. Both are broker dealers under Lincoln Financial Group, based in Radnor, Pa.
The regulator said the companies had failed to adequately safeguard non-public customer information. It also said that Lincoln Financial Services did not require brokers working remotely to install security application software on their own personal computers to protect the firm's securities business.
Lincoln Financial Securities took the heavier hit, with $450,000 in fines, leaving Lincoln Financial Advisors with a $150,000 punishment. FINRA said that LFS and LFA, for seven and two years, respectively, allowed current and former employees to access customer account records through any Internet browser. This access was through shared user names and passwords. Worse, according to FINRA, neither firm had policies dictating which employees had the login information. They were, therefore, not able to track which employees-or how many, for that matter-had gained access to the site during the seven-and two-year periods.
Also, the Web-based system that the firms used combined non-public customer account information from various sources and allowed employees to view the customer account information within a single site. They could access the system from two wide-open points: a link on the firm's website and any Internet browser.
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Fifty-two percent of the wealthiest Americans, those with a net worth between $5 million and $25 million, not including their primary residence, plan to buy individual stocks or stock funds in the coming 12 months, according to a new report from Spectrem Group. This makes equities the most popular choice for these ultra-high-net-worth investors, followed by the intention of 35% to invest in cash or cash equivalents, 33% to invest in international securities and 31% to put money in fixed income products. These investors currently have 10% of their total investable assets in such cash products as money market funds, checking and savings accounts, Treasury bills and CDs, with an average account balance of $659,000 at the end of 2010.
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Bank of America Merrill Lynch