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Japan Times
2 days ago
- Business
- Japan Times
New securities system enables those with dementia to invest with family's help
The Japan Securities Dealers Association has introduced a new framework for "family support securities accounts" that allows individuals experiencing cognitive decline from dementia or other conditions to continue investing with assistance from family members. Under the system, investors can designate trusted family members as their agents while they are still mentally capable. These designated agents can carry out securities transactions on the investors' behalf, in accordance with preestablished instructions, even after the onset of illness. The JSDA aims to promote the system as a proactive option for investors seeking to plan ahead for potential future health challenges. Typically, when investors lose their decision-making capacity due to dementia or other illnesses, their securities accounts are frozen. The new system is a response to growing demand from investors who wish to continue managing their assets despite such conditions. It also reflects the JSDA's broader aim to address key issues, such as inheritance planning and extending the longevity of retirement funds. "We have developed a solid framework for wider adoption," JSDA Chairman Toshio Morita said. "We will work with member securities companies to ensure that the system is well understood and accepted by as many investors as possible." Before a family support securities account can be opened, the original account holder, their designated agent and the hosting securities company must agree on an investment and management policy while the investor is still in good health. This process is followed by the conclusion of a notarized contract between the investor and the agent. Under the system, investors can manage their own investments as usual until they are diagnosed with dementia or other conditions that impair judgment. After the onset of such conditions, designated family members can act as agents, enabling them to sell assets or purchase stocks and investment trusts on behalf of the investors, excluding high-risk financial products. The current available options for managing assets when investors experience cognitive decline include family trusts under the trust law and statutory guardianship under the Civil Code. Family trusts allow for the management of a broad range of assets, but once a trust contract comes into effect, even healthy investors are no longer allowed to manage investments on their own. Statutory guardianship is intended for use after the onset of symptoms and involves complex procedures, such as filing a petition with the court. Yumiko Nagasawa, a senior official at Foster Forum, an organization that provides recommendations on financial products, praised the family support securities account system. "Given the growing need for asset management that assumes longer lifespans, the family support securities account is a more user-oriented system," she said. Imamura Securities, based in Kanazawa, Ishikawa Prefecture, plans to begin offering family support securities account services under the JSDA's framework as early as July. As many of its customers have family members living nearby, the company believes it will not be difficult for them to meet the service's key requirement of designating a trusted family member as an agent. Hisano Ohara, head of the brokerage house's internal controls department, said, "While robust safeguards must be in place to prevent the misuse of customer accounts, proper oversight will enable the effective use of customer assets." Securities companies in Japan are exploring various measures to address the aging of their customer base. In July last year, SMBC Nikko Securities established a cross-departmental "working group on supporting elderly customers and upgrading related services" to identify challenges faced at the operational level. The company has already introduced a family trust system and a "contingency agent system," which allows customers to appoint relatives in advance to act as agents for transactions. It now plans to expand its service lineup further. Specifically, SMBC Nikko plans to create a dedicated webpage offering comprehensive information about its services for older customers and their families. The company is also considering implementing a training program for sales staff focused on dementia awareness. Natsuki Kato, head of the customer-oriented business planning office, said, "We aim to provide not only investment advice, but also support tailored to our customers' individual circumstances."
Straits Times
24-04-2025
- Business
- Straits Times
Hackers manipulate stocks in $920 million illicit trading spree
TOKYO – Criminals are hijacking online brokerage accounts in Japan and using them to drive up penny stocks around the world. The wave of fraudulent trading has reached 100 billion yen (S$920 million) since it started in February and shows no signs of cresting. The scams typically use the hacked accounts to buy thinly traded stocks both domestically and overseas, allowing anyone who has built up a position earlier to cash out at inflated values. In response, some Japanese securities firms have stopped processing buy orders for certain Chinese, US and Japanese stocks. Eight of Japan's biggest brokers including Rakuten Securities and SBI Securities have reported unauthorised trading on their platforms. The breaches have exposed Japan as a potential weak point in efforts to safeguard markets from hackers. They also threaten to undermine the government's push to get more people to invest for their retirement, particularly since some victims say they are baffled as to how their accounts were broken into and the securities companies have so far largely refrained from covering the losses. One investor who asked not to be named to protect his privacy said he lost around 50 million yen when his account was hacked and used to buy both Japanese and Chinese individual stocks. The Tokyo resident in his mid-50s said an account notification suddenly popped up on his iPhone on the morning of April 16. Alarmed, he immediately called his brokerage and was told they could not freeze the account. Even though he had only ever purchased index funds that tracked the S&P 500 index and had never bought individual shares, his account was used to buy stocks on margin. Faced with plummeting prices, he chose to sell the securities on the 17th and 18th to avoid further losses. Since the stocks were bought with leverage, the brokerage said it would liquidate his holdings in the S&P to cover their losses. One of the stocks the investor said was purchased using his account was DesignOne Japan. On April 16, 5.8 million shares of the stock traded hands compared with a daily average of 194,000 shares over the last six months. Bloomberg was unable to independently confirm details of the transactions in the investor's account. Japan's government has told brokerages to engage in 'good faith' discussions with clients about compensation for losses, Finance Minister Katsunobu Kato said on April 22. The Japan Securities Dealers Association, the umbrella group for the country's securities firms, is also pushing its members to upgrade their systems to make multi-factor authentication mandatory. The group's chairman, Toshio Morita, criticized the failure to provide compensation for victims, while acknowledging that it was up to each firm to set their own policy. The criminals behind the scams are likely using techniques called adversary-in-the-middle and infostealers to gain access to the accounts, according to Nobuhiro Tsuji, a cybersecurity expert at SB Technology. The first method leverages both fake and legitimate websites to steal cookies, the small text files stored in web browsers that hold session data. The attack typically begins by luring the user to a fake site via a phishing email or malicious ad. The fake site then redirects the user to the legitimate site, where their login credentials are intercepted. In some cases, the attackers create extremely elaborate interfaces – for example, one side of the browser shows the real site while the other displays the fake one – to deceive users. In contrast, infostealers are a type of malware specifically designed to steal sensitive information such as IDs and passwords. Hidden in emails, malicious ads, or fraudulent websites, these programs can infect a user's device and silently exfiltrate all stored personal data – often without the user ever realizing they've been compromised. There have been at least 105,000 cases of leaked credentials in Japan, according to a study done by Macnica Security Research Center. One weakness in Japan is the propensity for people to use browsers rather than mobile apps, which have better protection, according to Yutaka Sejiyama, the deputy director of Macnica. There has not been a similar surge in cases overseas. BLOOMBERG Join ST's Telegram channel and get the latest breaking news delivered to you.
