In the world of finance, email hacking, website attacks, and identity theft have taken on a personality of their own and the field of cybersecurity has now become an industry worthy of monitoring. Investors and traders in all financial instruments should view cybersecurity seriously and be aware of the possible consequences involved.

Investors can do their bit to safeguard their money through a series of simple actions such as installing a good security software package which comes with anti-virus, anti-spam, and spyware detection features.

Security Code

Having a firewall set up on the computer or inserting a security code device that requires a password to enter is also advisable. Passwords should be creative so they are not easily duplicated and a mobile phone can be added to any Google account to receive a code that will reset your password via text message or automated call should any fraudulent activity be detected.

All these personal efforts are noteworthy but they don’t always eliminate the possibility of identity theft or hacking. Even large corporations that invest millions of dollars annually on security systems often find themselves prey to duplicity and fraud.

Only recently, Home Depot Inc. confirmed that its payment security systems had been breached, a data theft that could affect its customers in stores across the United States and Canada. This breach could be larger than the one that hit Target stores just last year when hackers stole at least 40 million payment-card numbers and 70 million other pieces of customer information. Since the 4th quarter of 2013, Target has spent over $146 million to resolve date-breach related claims.

Several years ago, Forex broker Oanda was hacked and the usernames and passwords of a number of account holders in their customer data base were used in an unauthorized manner, allowing an intruder to view the personal information of a limited number of their account holders. Only about 100-150 out of about 50-75,000 clients were affected but this was not a pleasant experience.

The most recent theft in the financial arena was reported this week when a list of 5 million Gmail addresses and passwords appeared on a Russian Bitcoin forum. Upon inspection, Google found that although at least 60 per cent of the accounts are believed to be active, none of its servers were compromised. The hacked data have the potential to be used to access Google accounts including Gmail as well as YouTube and other services owned by Google. The tech giant gave no explanation as to how this data reached the Russian forum and Google is warning its users to take steps to further protect their Gmail accounts.

FINRA

There are several organizations in the U.S. that monitor cybersecurity in the financial industry. One of the largest is the Financial Industry Regulatory Authority (FINRA) and each January, it releases its annual Regulatory and Examination Priorities manifest which highlights the many risk factors and escalating issues that could affect the market in the coming year. FINRA is not part of the government but an independent, not-for-profit organization authorized by Congress to protect America’s investors by making sure the securities industry operates fairly and honestly.

FINRA is the largest independent regulator encompassing all securities firms that do financial business in the U.S. According to Richard G. Ketchum, FINRA’s Chairman and CEO,

“FINRA’s examination priorities provide the industry with a road map of issues that may be of risk to the investing public. By providing clear and detailed guidance to firms, we hope to not only support firms’ compliance efforts but also to alert firms to the issues we have identified as the most salient risks to investors and the integrity of our markets.”

In its January 2014 report, FINRA underlined several areas of concern and warned of upcoming financial risks for the coming year.

SEC

The main regulatory body of U.S. securities in the U.S. is the U.S. Securities and Exchange Commission (SEC)which is a government body that has been offering protection to investors for the last 85 years. According to their by-laws,

“All investors, whether large institutions or private individuals, should have access to certain basic facts about an investment prior to buying it, and so long as they hold it.”

In order to realize this, the SEC requires public companies to disclose all meaningful financial and other information to the public.

The SEC does not get involved in cybersecurity but it’s very presence acts somewhat as a deterrent to hackers and others that may be considering some sort of cybercrime. Perhaps in the future, it will elect to expand its jurisdiction to include the ever escalating world of cybersecurity.

Traders need to be alert to any fraudulent broker activity. Many brokers work under some sort of regulatory supervision but there are others that do not offer this protection to their clients. With regulation or without, traders must trust the security of the broker’s server as much as they rely on the honesty of the broker himself. Traders must look for full disclosure and transparency and feel comfortable that the server is totally secure. This effort may not prevent profit losses but will encourage traders to continue their trading endeavors.

Cybersecurity is expensive and often painful for businesses, consumers and traders of all kinds because it demands additional scrutiny which can be quite cumbersome. But with an increasing need to shore up sites with better and improved safety methods, more and more cyber security companies are popping up, providing investors tremendous opportunities for financial profits.

However it is viewed, cybercrime is here to stay and although it will continue to rear its nasty head from time to time, traders should keep their eyes open to fraudulent activity while taking advantage of the investment opportunities it provides.