According to The New York Times, the couple discovered that the securities had been quietly transferred from her Vanguard account to a Merrill Edge account, without her authorization. A criminal had opened two new accounts in her name and initiated the transfer using the Automated Customer Account Transfer Service, or ACATS, a system designed to move assets quickly between brokerages.
Fortunately, the Trans caught the theft before the funds were gone. Merrill froze the money and returned the securities. But their experience underscores a growing type of financial crime experts say is spreading fast across the country.
Tran told The New York Times, “It’s scary, It can happen to anyone.”
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What Is ACATS System and How Are Criminals Exploiting It
The ACATS system was created to streamline transfers between investment firms, but that speed is exactly what fraudsters exploit, as per a MoneyWise report.Once a criminal opens a new account using stolen personal data such as a name, Social Security number, and address, they simply request a transfer from the victim’s legitimate brokerage.By design, the original brokerage must validate the transfer within one business day and complete it within three, leaving very little time for human oversight. Since most of the process is automated, the receiving firm often checks only basic details, and customers may not even be alerted until after their money starts moving.
In the Trans’ case, Vanguard notified them only after the transaction was already underway.
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Why Retirement Accounts Are Becoming Prime Targets
The Financial Industry Regulatory Authority (FINRA) has issued warnings about the rise in ACATS-related fraud, noting that retirement accounts are a prime target, as per the MoneyWise report.
Roughly $45.8 trillion sits in retirement savings across the US, and many of these accounts go unchecked for long stretches. They often hold liquid assets, stocks and funds that can be transferred or sold quickly, making them especially appealing to criminals.
According to Fidelity, the average IRA balance reached about $131,366 in 2025. In 2022, around $13.9 trillion was held in Roth IRAs alone.
How Investors Can Protect Themselves From ACATS Fraud
While investors can’t control how brokerage systems operate, they can take steps to reduce their exposure. Experts recommend, as per MoneyWise:
- Use extra security features: Many firms, including Fidelity, allow customers to lock outgoing transfers and send mobile alerts for account activity. Multi-factor authentication also adds another layer of protection.
- Request pre-transfer alerts: Ask to be notified before a transfer occurs, not after.
- Monitor accounts regularly: The sooner unauthorized activity is spotted, the better the chances of stopping it.
- Secure mail and paperwork: Shred old statements and ensure alerts can’t be intercepted.
- Watch for unusual correspondence: Letters from unknown brokers may signal an account was opened in your name.
- Ask about identity checks: Find out whether your brokerage uses document scans, likeness verification, or cross-reference databases to confirm identity.
If suspicious activity occurs, investors should immediately contact their brokerage to freeze the account, and then report the incident to FINRA, the SEC, local authorities, and the FBI’s Internet Crime Complaint Center (IC3), as per the report.
FAQs
Who is most at risk of ACATS fraud?
Retirees and long-term investors are common targets since their accounts often hold large sums and aren’t checked daily.
How can scammers open accounts in my name?
They often use stolen data, such as your name, address, and Social Security number, from data breaches or phishing scams.
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