Fortelus Capital Management LLP was targeted by an old-school con which left the fund seriously out of pocket.
Chief Financial Officer Thomas Meston received a call late on a Friday afternoon, purportedly from the hedge fund’s bank, Coutts. The caller told Meston that fraudulent activity had been noticed on the fund’s bank account, and requested security codes to cancel 15 suspicious transactions, writes Kit Chellel for Bloomberg.
Old-school phone scam dupes financial officer
Meston reluctantly handed over the codes, and it wasn’t until he returned to work on Monday that he realized something was wrong. After logging into the online bank account, he noticed that $1.2 million was missing. A frantic phone call to Coutts revealed that they had no record of the Friday evening phone call, and it dawned on Meston that he had been conned.
Not only did he lose his job, Meston is now being sued by Fortelus, which accuses him of being negligent. The case goes to show how sophisticated security systems can be compromised by simple human error.
“People are always the weakest link,” said Jason Ferdinand, who runs the UK’s first cyber security MBA course at Coventry University. Employees “often assume that they do not have to think about security because a machine or software is doing it for them.”
According to Daniel Astaire, a lawyer for Fortelus, no client funds were compromised by the breach, and police continue to investigate.
Firms should be aware of the “Friday afternoon scam”
The so-called “Friday afternoon scam” has affected various companies. In May, Zurich Insurance Group AG reported that law firms had been targeted by scam artists posing as bank staff during phone calls often made late on Friday afternoons.
Over the course of three months this year, Zurich says such fraud cost $7.74 million.
Court documents reveal that Fortelus was scammed by an “unknown third party,” and the caller claimed to be “Simon Hughes” from the Coutts Online Fraud Response team. Coutts spokeswoman Jo Thorne declined to comment on the case.
“This story is sad because it may well have been an honest mistake, but because of the technological advances made in finance, where the majority of their business is digital, significant losses can happen very quickly,” said Ferdinand.