Tien Tran logged into his wife’s Roth IRA one afternoon to check on a solar energy stock. Instead, The New York Times reports, he stumbled onto a nightmare — nearly half of her retirement holdings, worth about $120,000, had vanished. (1)
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 efficiently between brokerages.
Fortunately, the couple spotted the theft before the money disappeared completely. Merrill froze the funds and returned the securities. But their case reveals a form of financial crime that experts say is becoming much more prevalent.
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What is ACATS fraud?
The ACATS system expedites transfers between investment firms. It’s fast and fraudsters try to exploit that. (2)
Once a new account is opened — often using stolen personal data such as a name, Social Security number and address — the criminal simply requests a transfer from the victim’s existing brokerage.
The brokerage that holds the assets must validate the request within one business day and complete the transfer within three, leaving little time for human review. (3)
Since ACATS transfers are largely automated, the receiving firm often verifies only basic information, and the customer may not even be notified until after the move.
In Mr. Tran’s case, Vanguard only notified him after the transaction began.
“It’s scary,” he said to The New York Times. “It can happen to anyone.” (1)
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What’s at risk
The Financial Industry Regulatory Authority (FINRA) has warned that ACATS fraud is on the rise and retirement accounts are an obvious target. (4)
There’s about $45.8 trillion sitting in retirement accounts across the U.S., and many of these accounts are infrequently checked by their owners and contain highly liquid stocks and funds that can be sold or transferred quickly. (5)
Fidelity reports that the average IRA balance reached roughly $131,366 in 2025. (6) And in 2022, it was reported that approximately $13.9 trillion was held in Roth IRAs alone. (7)
How to protect yourself
Investors can’t control the entire system, but they can take preventive steps. Here are some basic tips to follow:
- Use extra security measures available: Some firms, like Fidelity, allow you to lock outgoing transfers and send notifications to your phone when your account is accessed. And most offer multi-factor authentication, which makes it harder for other people to get into your account.
- Request immediate alerts: Demand that the firm notify you before transfers happen — not just after.
- Monitor accounts daily: The sooner you catch unauthorized activity, the better your chance of stopping it.
- Shred statements and secure paper mail: Ensure no one can intercept mailed alerts.
- Check for unexplained mail: Odd letters from a broker may hint that someone opened an account in your name.
- Ask your broker about identity-verification protocols: Do they use “likeness checks,” document scans or cross-reference databases? FINRA encourages firms to adopt stronger identity safeguards.
If you discover unauthorized activity, contact your brokerage immediately to freeze the account, then consider filing reports with FINRA, the SEC, local police and the FBI’s Internet Crime Complaint Center (IC3).
Once stolen securities are liquidated or moved across accounts, recovery generally becomes far more difficult than with traditional bank fraud. In the Trans’ case, their quick action saved them from a devastating loss. But they were left shaken by how easily it all happened.
Their story is a reminder that even the most careful investors are only as safe as the systems protecting them. Staying vigilant may be the last and best line of defense.
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Article sources
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
The New York Times (1); Lewitas Hyman PC (2); FINRA (3, 4); ICI (5); Fidelity (6); Unbiased (7)
This article originally appeared on Moneywise.com under the title: ‘It can happen to anyone’: ACATS fraud is on the rise — what every retiree needs to know to protect themselves
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.