SEC Says Data Breach Exposed Employee Stock Holdings

The Securities and Exchange Commission has warned its employees to monitor their credit reports for signs of fraud after a contractor shared their brokerage accounts with unauthorized companies for more than two years.

In a letter to employees dated Oct. 7, Thomas Bayer, the SEC's chief information officer, said Financial Tracking Technologies, which manages a computer system that handles employee stock trades, shared that information with "one or more consultants" and "a global technology and business services firm."

Although the SEC does not know whether the data has been misused, "it is prudent to consider taking some precautionary actions to protect yourself," said the letter, which was first reported Friday by Reuters.

The computer system storing employee brokerage accounts, known as the Ethics Program System, was created two years ago after the SEC's inspector general found cases where SEC lawyers may have benefited from insider trading. The computer system was designed to prevent SEC employees from trading stocks that the commission regulates.

According to its website, Financial Tracking Technologies, based in Riverside, Conn., offers the system to government regulators and "two of the five largest public companies" in the United States, among others. The company could not be reached for comment.

The SEC's IT department initially found out last month that Financial Tracking Technologies had been sharing its work on the computer system with other companies since June 2009. SEC spokesman John Nester said the commission learned about the breach when a former employee of Financial Tracking Technologies "came to us with concerns about how SEC data was being handled."

According to the company's contract, the SEC must give its approval before the company can share that data with subcontractors, the letter said. Nester said the SEC has not decided whether to sever its contract with Financial Tracking Technologies.

The letter said the SEC plans to provide employees with a free year of credit monitoring, but said employees should consider taking the additional step of placing a fraud alert on their credit files.

UPDATE: In a statement Saturday, Financial Tracking Technologies said the company had notified the SEC of a third party vendor, but that financial data of SEC employees "remained under our control at all times" and "no breach of systems resulting in any misuse of personal data occurred."

Comments

[wonderYrednow]

01:53 AM on 10/16/2011

Sharing is caring.

[Louis Bernardi]

05:32 PM on 10/15/2011

Another facepalm... I remember my schools network getting hacked by a 13 year old who said "it was incredibly easy"... Is there no good solution? I stopped reading all of the hack posts, they're too frequent and frankly a bit daunting.

[Readcomment]

10:55 AM on 10/15/2011

The SED hasn't decided whether to sever the contract with Financial Tracing Technologies? Are you kidding me? This decision should be a no brainer! Ridiculous.

[authorized-user]

08:18 AM on 10/15/2011

Now we know why insider trading is so hard to find and prosecute when the SEC staff are doing the same things they should be guarding us from.

[teachone]

09:49 PM on 10/14/2011

Sounds like a "set up" by wallstreet to me!! More revenge?? They don't have a penny of my money in the market, never will, they don't have any control over my financials and I don't have to kiss their rearend or fear the repercussions as you all do, they own you! If people were smart they would take all of their money out of their retirement account and the stock market and put it in a safe in their home. Only the born wealthy are allowed to make a big nest egg in the market, check with your friends, you will see few commoners who have obtained a secure retirement from the stockmarket, they have it rigged that way, the rich get richer, everyone else who invests loses their money to pay for the rich who get richer! It is no different then jumping on a gambling boat and throwing your retirement money on the poker tables. You have to be ignorant to take such a chance!!!

[bassboatboy]

09:30 PM on 10/14/2011

"may have benefited from insider trading"? Hmmmm, do you suppose? :)

[elantiq]

09:09 PM on 10/14/2011

Why are SEC employees trading stocks, in the first place? Why do they have a personal trading account sponsored by the SEC?

[howard11816]

10:09 PM on 10/14/2011

Its an approval and tracking system for investments that employees make - for retirement, college savings, etc. before an emp;loyee can make a trade it has to be screened to ensure the security, broker/IA, or company does not have business before the sec. its not a "personal trading account sponsored by the sec'.

you don't read much do you?

[Uhgg]

09:09 PM on 10/14/2011

Wow the Fox Guarding the Hen house

[jimme]

07:32 PM on 10/14/2011

This is worse than sports figures involved with betting/gambling. There should be a rule stating that any SEC employee is barred from trading. We can call it The Pete Rose rule.

[theobserver4]

01:32 PM on 10/15/2011

why should they be denied the wonders of the glorious and infallible free market? They should be free to lose money in the market like the rest of us.

:-)