Some TD Ameritrade Info Stolen

September 14, 2007

Associated Press

http://money.cnn.com/news/newsfeeds/articles/apwire/D8RLGKG80.htm



Online brokerage TD Ameritrade Holding Corp. said Friday one of its databases was hacked and contact information for its more than 6.3 million customers was stolen.

A spokeswoman for the Omaha-based company said more sensitive information in the same database, including Social Security numbers and account numbers, does not appear to have been taken.

The company would not share many details of its investigation, including when the hack took place, because it is still looking into the theft and cooperating with investigators from the FBI, Securities and Exchange Commission, Financial Industry Regulatory Authority and local authorities.

But Ameritrade has known about the problem at least since late May when two of its customers sued the brokerage in federal court because they were receiving unwanted e-mail ads on accounts used only for Ameritrade.

The data on Ameritrade's servers may have been vulnerable for an extended period of time dating back at least to last October, according to the lawsuit filed by lawyer Scott A. Kamber. The company said Friday the problem had recently been fixed.

The plaintiffs in the lawsuit had wanted the court to order Ameritrade to tell its customers about the data problem, but Ameritrade issued its release before a hearing could be held. The plaintiffs are also seeking damages and are trying to qualify as a class-action lawsuit.

"They preferred putting out a press release with their own language in it rather than have the court order them to put out a release with our language," Kamber said.

Ameritrade officials did not immediately respond to a message left Friday afternoon with questions about the lawsuit.

Earlier in the day, Ameritrade spokeswoman Kim Hillyer said the company discovered the breach in its system during a routine review of complaints about e-mail ads.

"As soon as we found the issue and were able to stop it, we made plans to notify clients," Hillyer said.

The plaintiffs in the lawsuit say all the unwanted e-mail ads they received appeared to be designed to manipulate the value of thinly traded stocks.

This breach is smaller than the biggest known data breach at a company, which was the theft of at least 45 million credit card numbers of TJX Cos. retail customers that was reported earlier this year. But the Ameritrade problem is still significantly larger than many data breaches that involve hundreds or thousands but not millions of records.

Ameritrade spokeswoman Katrina Becker said there is no evidence that any customer suffered financial losses or had been a victim of identity theft.

Becker would not say why the company was confident Social Security numbers had not been taken even though they were kept in the same database as customer contact information, trading data and demographic information.

Other Ameritrade databases where information such as passwords, user IDs and personal identification numbers are kept were not violated, the company said.

Ameritrade hired ID Analytics Inc., which has expertise in identity theft, to help with the investigation, and it plans to continue using the company to monitor its servers for potential identity theft.

ID Analytics will continue checking Ameritrade customer data against other databases to watch for identity theft because it could emerge later, said Mike Cook, chief operating officer for the San Diego company.

"Just because a breached file is not misused today, it doesn't mean that it won't be misused in the future," Cook said.

If all the thieves obtained was basic contact information, Cook said that might not be enough to steal an identity and apply for credit in another person's name. But he said the thieves might try to obtain additional information from a victim by posing as a legitimate business in an e-mail.

Ameritrade started notifying its customers about the data theft Friday, and the brokerage posted information about it on its Web site.

"While the financial assets our clients hold with us were never touched, and there is no evidence that our clients' Social Security Numbers were taken, we understand that this issue has increased unwanted SPAM, which is annoying and inconvenient for them," Chief Executive Joe Moglia said in a statement. "We sincerely apologize for that and any added concern this may have caused."

Ameritrade is telling customers they don't need to do anything with their accounts except "remain alert in guarding their personal information." The company's asset-protection guarantee would cover any losses in Ameritrade accounts because of identity theft or fraud.

Ameritrade said it is confident that it identified how the information was stolen and has changed its computer code enough to prevent the theft from recurring. It said any new client who opened an account after July 18 was not affected.

Hillyer said the company's investigation was able to determine that the database had not been hacked after July 18.

Ameritrade's 6.34 million accounts as of July make it one of the nation's biggest discount brokers after leader Charles Schwab Corp., which has 6.9 million brokerage accounts.


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