Wednesday 8th July, 2015

A Chief Financial Officer at London based, Fortelus Capital Management LLP got an alarming phone call just as he was getting ready to leave work on a Friday, according a Bloomberg recent article published yesterday.

The caller said he was from Coutts, the hedge fund’s bank, and warned there may have been fraudulent activity on the account. Fortelus Chief Financial Officer Thomas Meston agreed to use the bank’s smart card security system to generate codes for the caller to cancel 15 suspicious payments.

On Monday, Meston logged on to the firm’s online bank account, and found 742,668 pounds was missing. It emerged later that Coutts, part of the Royal Bank of Scotland Group Plc, had no record of the Friday afternoon phone call.

Meston contract was terminated by Fortelus aftwards and he is now being sued by the fund, which says he breached his duty to protect its assets, although denies he was negligent in the case.

Firms too often see cyber security as a technical issue and don’t recognise the risk of employees being targeted, the Bank of England said in a report last week that called cyber crime a growing threat to financial stability.

“People are always the weakest link,” said Jason Ferdinand, a director at Coventry University Employees “often assume that they do not have to think about security because a machine or software is doing it for them.”

Meston “believed that he was preventing a fraud from being carried out against the claimants, and this belief was reasonable,” his lawyers said in court filings. They said he’s not personally responsible for the firm’s assets and that Coutts should have to repay Fortelus.

Hedge funds are not the only victims of a “Friday afternoon scam.” Zurich Insurance Group AG warned in May that law firms were targeted by fraudsters impersonating bank staff that asked for access to accounts, often late on a Friday.

The frauds cost firms and their insurers an estimated 5 million pounds over three months this year, Zurich said.