It's All About the Benjamins

By Maria Trombly | Securities Industry News | Nov. 18, 2002

according to Tom Kellerman, senior data risk management specialist at the World Bank, hackers don't just target Wall Street firms because they're visible icons of American power. They go after them because there's money at stake.

"These are organized criminal groups who have made a business model around hacking because hacking is more lucrative than heroin or cocaine," he said

For example, hackers can steal a customer's identity, create new brokerage accounts, move around shares they don't own-and, at the end of the process, launder their ill-gotten gains through online casinos and get away scot-free.

"It's just ridiculous how much money can be laundered through that environment," he said.

And, in most cases, the public never knows, he added. More than 80 percent of all cyber crime incidents in the financial sector are never reported, he said.

"The banking and financial sector is built on a model of trust and confidence," he said. "And they don't want that trust and confidence undermined."

One case that has come to light recently, he said, is that of South Korea's Daewoo Securities, which lost $21.7 million this past August to hackers who broke through firewalls to sell 5 million shares that they did not own.

"Hackers have broadened their horizons," Kellerman said.

Daewoo and two other Korean securities firms were recently penalized by Korea's Financial Supervisory Commission and forced to suspend business during the month of October because of their contribution to the problem-the FSC's examiners said some employees at the firms were found to have been involved in illegal online stock trading, and that the brokerages had poor security in place to thwart stock scams.