What do share sale / boiler room frauds offer?
Share sale frauds - or boiler room frauds - are
committed by bogus stockbrokers, usually based overseas, who
cold-call investors and pressure them into buying worthless
or non-existent shares.
How do share sale / boiler room frauds work?
Typically, you are contacted out of the blue by
a professional-sounding stockbroker who offers you investment
opportunities that seem too good to be true.
You are also promised free research reports,
special discounts and ‘secret’ stock tips. These offers are
designed to reel in potential investors.
In reality, the fraudsters are cold calling as many people as
possible, persuading them to invest in shares that are
either non-existent or so worthless they are impossible to
sell.
The fraudsters may provide false share
certificates and other documents to make the investments
seem credible.
Once the fraudsters have squeezed whatever money they can from
investors, they disappear.
How can I recognise share sale / boiler room
frauds?
- If you’re considering any type of investment, always remember:
if it seems too good to be true, it probably is.
High returns can only be achieved with high risk
- Share sale frauds tend to start with a telephone call
out of the blue. Using hard-sell techniques, the
fraudsters try to pressure you into making rushed decisions, giving
you no time to consider the nature of the investment
- As with many fraudulent schemes, you are encouraged to
keep your investment secret to ensure you receive maximum
returns. This allows the fraudsters to hide the real nature of
their scheme.
What should I do?
- Fraudsters aim to build an air of legitimacy around their
business. This means they will often use technical jargon,
impressive job titles and mock websites to look credible.
Resolve any suspicions you might have about a scheme’s authenticity
by investigating the company’s status and contact details
- The Financial Services Authority regulates stockbrokers based
in the UK. You can check a stockbroker’s authenticity by visiting
the FSA’s:
- Register of
authorised firms
-
List of unauthorised firms and individuals
-
List of unauthorised overseas firms
Alternatively, call the FSA consumer helpline on 0300
500 5000
- Operation Archway, run by the City of London Police, is the
national reporting system for share sale fraud. If you believe you
have had contact with a share sale fraudster, complete a
questionnaire and email or post it to the team. Futher details are
available on the
Boiler Room advice page on the City of London Police
website.
In addition:
- You should break off all contact with the
fraudster immediately
- If you have given the fraudsters your bank account details,
alert your bank immediately
- Keep any written communications you have
received from the share sale fraudsters. This may help you give
evidence to the authorities
- Because many boiler rooms are run from abroad, they are not
covered by UK jurisdiction or compensation schemes. Unfortunately,
therefore, you are unlikely to recover any lost
investment
- Be aware that you are now likely to be a target for
other frauds. Fraudsters often share details about people
they have successfully targeted or approached, using different
identities to commit further frauds
- People who have already fallen victim to fraudsters are
particularly vulnerable to the fraud recovery fraud. This is
when fraudsters contact people who have already lost money through
fraud and claim to be law enforcement officers or lawyers. They
advise the victim that they can help them recover their lost money
- but request a fee.