Save content
Have you found this content useful? Use the button above to save it to your profile.
AIA

Bogus shares: the rise of boiler room fraud

by
15th Mar 2011
Save content
Have you found this content useful? Use the button above to save it to your profile.

Boiler room fraud - known also as ‘share scams’ - targets both novice and experienced investors, and is increasingly taking on different forms.

In a recent publication the Fraud Advisory Panel outlines the warning signs and how to report fraud of this type.

According to the Serious Fraud Office, boiler room fraud is:

“The cold calling of victims by fake stockbrokers persuading them to buy stocks or bonds that are worthless or non-existent.”

Most boiler rooms operate from call centres based overseas, predominantly in Europe, Asia and the USA. Some use UK telephone numbers or postal addresses to disguise this, or may even impersonate genuine UK firms.

UK investors are estimated to lose more than £200m each year to share-related fraud and the average loss per victim is about £20,000.

The report recommends the following course of action to protect yourself:

  • Seek professional and independent financial advice
  • Ask questions! Make sure you understand what type of asset you are investing in and the investment strategy behind it
  • Compare the market to see whether the return you are being offered is realistic and consistent with those offered by other similar investments
  • Review historic returns and ensure that these are in line with the market
  • Check the FSA register to see whether the individual or business is authorised to conduct investment business in the UK
  • Know who you are dealing with. Look the company up on the Companies House website to see whether it is a registered company and review its annual report and accounts
  • Take your time to make an informed investment decision
  • Report an investment fraud to Action Fraud
  • Remember, if it sounds too good to be true, then it probably is

It also states that you should not do the following:

  • Believe everything you are told
  • Buy investments from unauthorised individuals or businesses. The FSA publishes warnings about unauthorised firms (based in the UK and overseas) offering financial products to UK investors on their website (see ‘warnings and alerts’)
  • Be pressured to invest by cold callers, friends, family or acquaintances
  • Invest in schemes that promise returns based on recruiting new investors
  • Agree to make an investment in a high-pressure meeting or presentation
  • Invest in a multi-level marketing plan or investment without professional and independent financial advice
  • Invest in a scheme that has a secretive strategy or is too complex to understand
  • Send money or give your bank account details to cold callers without having first checked whether the caller and investment are legitimate
  • Forget that you can say no to an investment opportunity

The Fraud Advisory Panel acknowledges the contribution of KPMG’s Charlie Dickin in the preparation of the Fraud Facts.

To view the entire Boiler room fraud document, visit the Fraud Advisory Panel website.
 

Tags:

Replies (2)

Please login or register to join the discussion.

avatar
By jonbryce
16th Mar 2011 18:04

Just hang up

If someone phones you trying to sell you shares, just shout them down.  They will be persistent, but just keep shouting over them until they give up.

Thanks (0)
avatar
By hpyatt
18th Mar 2011 11:23

Just Hang Up

Simpler to tell them you've just filed for bankruptcy - they just say 'Oh - sorry' and hang up. I use it for sales pitches. For market researchers and their ilk I tell them I'm in the Telephone Preference Service - same reaction.

Thanks (0)