This Sunday the UK-based Daily Mail’s ‘Mail on Sunday,’ published that some 2,000 customer account details at Barclays had been stolen, as was shown to the publication by an anonymous whistleblower with access to the unauthorized files that contained the highly sensitive data.
This is a case of the media bringing to light a serious situation that a firm was unaware of having taken place, thanks to the whistleblower coming forward.
With regards to this news, Forex Magnates’ reporters spoke today with David Cross, a member of the press office at the Financial Conduct Authority (FCA), he said, “Barclays made us aware of the situation, we’ve been working with them now to make sure that consumers who might have been affected are being contacted properly and that we are now looking into this with our team.”
According to people familiar with the matter, the regulator found out about this just last Friday, and since the loss is a breach under the Data Protection Act, applicable law would apply in addition to criminal charges which could be pursued in connection with the theft aspect of it.
Whereas the involvement of the Financial Conduct Authority (FCA), although initially is to help ensure customers are given appropriate notice of the breach of their personal data into the hands of unauthorized persons, Barclays may also be scrutinized to make sure that adequate measures were in place with regards to applicable rules under “Systems & Controls” that it’s bound by.
Barclays Responds to News About the Data Theft
Forex Magnates’ reporters contacted a company spokesperson at Barclays who provided a copy of the prepared statement the firm had already published on its website, following the media reports yesterday by the Daily Mail, which read:
“We are grateful to the Mail on Sunday for bringing this to our attention and we contacted the Information Commission and other regulators on Friday as soon as we were made aware.
Our initial investigations suggest this is isolated to customers linked to our Barclays Financial Planning business which we ceased operating as a service in 2011. Based on what we have seen, this appears to be data from 2008 or earlier.
We will take all necessary steps to contact and advise those customers as soon as possible so that they can also ensure the safety of their personal data.
Protecting our customers’ data is a top priority and we take this issue extremely seriously. This appears to be criminal action and we will co-operate with the authorities on pursuing the perpetrator.
We would like to reassure all of our customers that we have taken every practical measure to ensure that personal and financial details remain as safe and secure as possible.”
Data Linked to Defunct 2011 Business, Stolen Leads Sold on Black Market
The data involved, as mentioned above in the official statement, was linked to a business that ceased operation in 2011, and any information that may have since changed might not be up-to-date.
However, there was highly sensitive information, such as passport numbers, dates-of-birth, and other personally identifiable details of permanent nature, including customer habits, traits and other psycho-graphic data which are generally unique to each person, and that could add value to the list that was purportedly being sold many times over.
The article posted by the Daily Mail said the information had been sold on the black market to “rogue” traders, or boiler-room operators, known as “spank-shops” in the U.K, who use high-pressure sales tactics to ‘slap around’ and lure investors into various scams.
The publication, in close guidance from its lawyers, reviewed a sample of the data for the purpose of verifying its authenticity, after a memory-stick (USB stick) was passed along to it from the whistleblower in question who said that each of the files – from the list of 2,000 names – was selling for £50 at the hottest, and then £8 each, once the names had been solicited many times over.
The anonymous person also said the 2,000 records in the file had come from a database of some 27,000 stolen names, however, people close to Barclays familiar with the story said there was no evidence to support such a claim, as told to Forex Magnates’ reporters.
Background on the Origin of the Stolen Leads, As Told by Whistleblower
According to reports from the Daily Mail, a boss of a brokerage firm had asked the whistle-blower – the former commodity broker – in September 2013, to sell the leads to other traders, catching the whistleblower by surprise, as he knew the leads were “fantastic” and asked why the boss wasn’t himself using the leads – to which the boss replied, “We have – sell it as secondary data.” In addition, each lead was said to be worth £50 initially when the data was fresh, then offered for £8 each as the leads become old or less hot, as noted above.
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Although the whistleblower was instructed/asked to sell the stolen leads, he said, according to the post by The Mail on Sunday, that he had decided not to sell them even after showing the leads to a group of prospective brokers, after realizing how wrong it all was at that stage, according to his conscience.
In addition, since the article cited that the firm had lured some 1,000 victims into a scam involving rare earth metals -between December 2012 and September 2013 – it’s possible that the FCA and UK Police could be close to finding out what happened, if the whistleblower’s identity can be confirmed, provided that he is given some form of immunity or protection, as a result of coming forward and under applicable permissible law or provided that such whistle-blowing information is given to the authorities.
However, according to the reports by the Daily Mail on this story, all evidence of the trading floor was said to have been destroyed, after investors caught wind of the scam, and the boss instructed to “shut the trading floor.”
This included orders to destroy a labtop and 15 bags of documents, and bleaching desks as to eliminate traces of DNA from the office. The whistleblower was quoted as having said that the boss asked him, “Have you got the Barclays leads?”, to which the whistleblower purposefully lied in order to potentially preserve the last bit of perceived evidence, “No, I haven’t, they must have been destroyed,” as quoted by the Daily Mail article.
The whistleblower told the Daily Mail, “But I kept them because I thought the whole thing had gone too far. I want to stop it now, to tell people what was happening.”
Scene Literally Connected to Hollywood Movie, The Wolf of Wall Street
As reported by the Mail on Sunday, during the interview with the anonymous whistleblower, the former commodity broker said that, “We got trained by Jordan Belfort, the real-life Wolf of Wall Street. It cost £38,000 for an hour’s conference call with him from New York. Three different firms took part and there were 40 brokers in the room, sitting around a phone[…].”
If this is true, Belfort could be contacted for information regarding the call and details about that transaction that could help link the people involved, in Forex Magnates’ opinion.
Jordan Belfort had just been the subject of the Blockbuster hit Hollywood movie by Martin Scorsese, “The Wolf of Wall Street.”
The movie was an attempt to retell a true story about Jordan Belfort’s New York-based boiler room operation Stratton Oakmont Inc., that used such high-pressure sales tactics to rake in huge commissions at the expense of clients’ investments in the late 90’s.
His firm eventually was the subject of numerous regulatory actions and violations by the National Association of Securities Dealers (NASD), the predecessor of the current U.S. securities markets regulator FINRA.
The movie was thought to bring considerable awareness (and controversy) to a dark side of Wall Street that is not as wide-spread thanks to countless regulations, acts and laws that have since been passed, although the schemes have evolved, as cited in the above rare earth metals example, where despite global regulatory efforts such firms still exist.
Both Scorsese and Leonardo DiCaprio, have publicly said that they made the movie as it was a brutally honest recap of the all the mishaps and wrong-doings that Belfort had committed at Stratton Oakmont For example, both said that nothing was held back from the autobiography Belfort had written – that inspired both the world-class film maker and movie star to become interested in making a movie out of it, over a multi-year investigative project.
According to a spokesperson of the Information Commissioners office, The Mail on Sunday arranged to pass on the data to its office, the spokesman said, “We’ll be working with The Mail on Sunday this week as well as working with the police,” as reported by the Mail on Sunday in the article.
Barclays Full-Year 2013 Results Tomorrow, Updates on Investigation
The news has come just days ahead of its full-year results which are expected to be reported tomorrow, February 11, 2014, when Barclays announces adjusted profit before tax for 2013 of £5.2bn and statutory profit before tax of £2.9bn, according to information on its corporate website.
Forex Magnates doesn’t expect granular information to be reported on its Foreign Exchange business which still remains significant even after exiting its retail offering at the end of January.
In addition, today the firm published an update on the investigation, which among other details, provided contact information for inquiring customers that may have been affected, an excerpt of the notice read as follows:
“You don’t need to take any action – our team will proactively contact customers this week who we know to be impacted. Our specialists will contact you via letter and by telephone to discuss the data loss, to help you understand how you may have been affected, and put things right in the event that you believe you have suffered any detriment.
However, if you would like to speak to someone in the meantime, you can contact our team on 0333 202 7509 from the UK, or +44 333 202 7509 from outside the UK.”