The Triad Perspective

Triad Investment Management, LLC is a SEC-registered investment adviser based in Newport Beach, California.  We manage portfolios, including retirement and corporate accounts, and provide investment counsel to our select group of clients, which include:
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'Tis the Season for Fleecewear

The weather has turned colder, even here in mostly sunny Southern California. My usual casual outfit of T-shirts and shorts gives way to heavier stuff. Jackets, sweaters, coats. I even have a wool coat that gets occasional use. It's technically known as fleece. It feels pretty good.
Fleece commonly refers to the coat of wool from a sheep. But fleece has another meaning, as in to defraud a person of money or property. You can see the linguistic connection. Fleece a sheep, fleece a hapless person. Or, increasingly, fleece a not-so-hapless person.

Recently, the Wall Street Journal told of an oncology nurse who was scammed out of her life savings. The phone caller posed as an FBI agent and told her that her Social Security number had been stolen and crimes committed in her name, and that she needed to transfer assets to accounts the scammer controlled, to "protect" her funds and prevent her from being arrested.
The combination of threats and assurances is common and convincing in many scams. The appeal to authority convinces otherwise rational people to do irrational things. I won't give you all the gory details, but in the nurse's case it involved her accessing multiple accounts over multiple days, and upwards of 50 hours on the phone with the scam artist. A total of $340,000 was fraudulently transferred.
These guys are good. And the victim was no fool; this nurse was a doctor before immigrating to the United States.
But wait, you say....that could never happen to me! And you're probably right. But don't be too overconfident. In fact, I almost got taken in myself.
We'd been getting calls at home from the same phone number for weeks. We don't answer phone calls from numbers we don't recognize, but the constant calls caused me to finally pick up the phone. A man told me he was with Microsoft, and that my account had been hacked into. Naturally I was concerned but a bit suspicious. My phone's Caller ID said Microsoft. The caller said he could prove he was with Microsoft if I logged onto their website and viewed the customer contact phone number.
I did. It matched the number on my Caller ID. I thought for a second, ok it's legitimate. The caller wanted me to go to a website and click on a link to fix the issue. I told him I'd hang up and call the number I saw on the Microsoft website. He said I'd be on hold for an hour and bad things might happen. I hung up, called Microsoft and explained the issue. Had I done what was asked, it's likely the scammer would have installed some malware on my computer, or perhaps locked my computer and asked for ransom, or steal passwords unknowingly.
I hadn't heard of "spoofing", which is when a caller falsifies the name and number on Caller ID. Ultimately what saved the day was good ol' suspicion, despite the caller sounding authentic and genuinely trying to help. But I could have been fooled.

So, what to do about this modern scourge? The first thing to recognize is fraud artists aren't going away and will probably only become more creative in the future. These crooks generally rely on your trust, either on the phone, or through appearing legitimate online. If you can't verify the person's identity, refuse to cooperate.
Never give personal information such as Social Security number, credit card numbers, drivers' license, user IDs and passwords, to anyone you haven't been able to verify. Remember, scammers manipulate our innate acceptance of authority to impersonate the IRS, Social Security, the police, Microsoft, or some other recognizable institution.
At Triad, we have fraud protection policies and processes in place, but we're constantly trying to "raise our game" to stay one step ahead of these creative crooks. Several years ago, we decided to buy cyber fraud insurance to provide an additional layer of protection for our clients. But the best protection is to be extremely vigilant and not get fleeced in the first place.
-John Heldman, CFA

Past performance does not guarantee future results.  Results are presented net of fees and include the reinvestment of all income.  The opinions expressed herein are those of Triad Investment Management, LLC and are subject to change without notice. Consider the investment objectives, risks and expenses before investing. The information in this presentation should not be considered as a recommendation to buy or sell any particular security and should not be considered as investment advice of any kind. You should not assume that any securities discussed in this report are or will be profitable, or that recommendations we make in the future will be profitable or equal the performance of any securities discussed in this presentation. The report is based on data obtained from sources believed to be reliable but is not guaranteed as being accurate and does not purport to be a complete summary of the available data. Recommendations for the past twelve months are available upon request. In addition to clients, partners and employees or their family members may have a position in any securities mentioned herein. Triad Investment Management, LLC is a SEC-registered investment adviser. More information about us is included in our SEC Form ADV Part 2, which is available upon request.  

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