Four Take-Aways From The CBI's First Cyber-Fraud Fine

Appian Asset Management Limited ("Appian") has been fined €443,000 for regulatory failures which, according to the Central Bank of Ireland (the "CBI"), left it exposed to cyber-fraud. This is the first time that the CBI has issued a fine concerning a cyber fraud. Some lessons which can be learnt from the case are considered below.

Background

One of Appian's clients invested €1 million in two Appian managed sub-funds in March 2015. A fraudster hacked the client's web based email account and over a two month period impersonated him in email correspondence with an Appian employee. The fraudster induced Appian to instruct its depositary and transfer agent to liquidate €650,000 of the client's investments and ultimately to pay the funds to two third party corporate accounts, controlled by the fraudster, in the UK.