The Securities and Exchange Commission has fined a large Massachusetts advisor $250,000 for improper custody controls after a hacker used a client's e-mail to have more than a quarter million transferred to a foreign bank.

The SEC imposed sanctions as part of a settlement with GW & Wade, a registered investment advisor based in Wellesley, Mass., that has 1,600 clients and manages $3.8 billion in assets. In recent weeks, the SEC has announced other cases against RIAs involving lax compliance procedures.

GW & Wade primarily manages assets for high-net-worth retail clients and in certain cases did not have proper safeguards as a custodian, the SEC said. In one kind of arrangement, GW & Wade had many clients sign blank letters of authorization so that when it needed to transfer funds it could do so without obtaining the client's signature, the agency added. In some cases, GW & Wade cut out signatures from previously executed letters of authorization and pasted them on new ones, the SEC said.

The practice enabled an individual to commit fraud against a client. The individual hacked into into a client's account in June 2012 and sent e-mails to GW & Wade instructing funds be sent to a foreign bank. For each wire request, the individual said he needed the funds disbursed that day, but he could not access a telephone and gave excuses that included he was in a meeting or at a funeral, the SEC says.

Because GW & Wade had pre-signed letters of authorization and did not have procedures to confirm the authenticity of the transfer requests, the funds were wired without the client's knowledge or authorization, the SEC says.

The third-party fraud wasn't discovered until three separate wires totaling $290,000 had been sent to a foreign bank, the SEC says, adding that GW & Wade compensated the client for all the losses.

The SEC cited other arrangements over custody accounts that could have caused issues, including that GW & Wade had been granted third-party delegation on check-writing accounts and had log-ins and passwords for outside client accounts, such as employee retirement and brokerage accounts.

With all of these arrangements involving custody, the firm failed to obtain an examination by an independent public accountant and to identify the assets over which it had custody in its ADV Form. GW & Wade also failed to implement adequately its policies and procedures for calculating its advisory fee and billing clients, the SEC said.

The firm's conduct violated the Advisers Act, the SEC said. However, GW & Wade cooperated with the SEC once the violations were identified and quickly made changes, the SEC said. As part of the settlement, the firm is hiring an independent consultant to review all of its compliance policies to ensure it has the proper custody procedures in place and is charges clients accurately.