The past year has seen a massive surge of interest in investing. With people out of work and getting government aid, many turned to investing as a way to put their hard-earned money to work for them. That led to large numbers of Canadians signing up for brokerage accounts.
No doubt, investing in stocks is an exciting and potentially lucrative hobby. But it comes with a serious risk:
Having your brokerage account hacked. According to a 2015 MarketWatch article, 88% of brokers and 75% of investment advisers reported being victims of cyber-attacks that year. That certainly sounds troubling. And in a sense it is. There’s nothing stopping hackers from siphoning funds from a brokerage account they’ve hacked into. They can also make unauthorized trades.
In 2014, a Russian man in New York City was sentenced to 30 months in jail for making unauthorized trades on other peoples’ accounts. Frightening stuff. But could such an individual actually steal your stocks?
Hackers can break into brokerage accounts Before going any further, one thing needs to be established:
Hackers absolutely can break into brokerage accounts. Banks and other brokers have pretty good cybersecurity. But if a hacker has your bank account and you don’t have two-factor authentication, they can get in. If they have your trading password, they can also make trades as they see fit. So, to protect your account, you will want to:
A quality Canadian brokerage stock If you’re an investor in bank stocks like the Toronto-Dominion Bank (TSX:TD)(NYSE:TD), all this talk of brokerage hacks might have you concerned. First, you may worry about your own stocks being compromised. Second, companies like TD can lose a lot of money to such activity, thereby harming your return.
In TD’s case, at least, it appears there is pretty decent security. Among other measures, TD Direct Investing offers:
- Two-step verification.
- Trading passwords.
- Ultra-strong encryption.
- Security phone calls to alert you when your account has been compromised.
The CIPF–the closest analog for brokerage accounts–only protects you in the event of a broker’s insolvency. That does seem to imply that brokerage accounts are a little less secure than checking accounts. But TD is a very well-respected bank with a solid track record of doing its clients right. You’re most likely safe in their hands.
The post Brokerage: Can Hackers Steal Your Stocks? appeared first on The Motley Fool Canada.
Fool contributor Andrew Button owns shares in TD Bank.