Boiler room scams – Shareholders beware
It will not come as a surprise, to many of you, that there is a legion of persons out there looking to get money off you for nothing; so beware of the scammers.
In recent times, many companies have become aware that some of their shareholders have received unsolicited telephone calls or other forms of communication concerning investments. Typically, these come from overseas-based firms targeting UK shareholders, offering to sell them what often turn out to be worthless or high-risk shares in US or UK companies. These scams are commonly known as ‘boiler rooms’. These alleged ‘brokers’ can be very persistent and persuasive. A 2006 survey by the Financial Services Authority (FSA) reported that the average amount lost by investors was around £20,000.
It is not just the novice investors that have been duped in this way; many of the victims are successful investors. The key to avoiding this is to be extremely suspicious of any unsolicited approaches, you may receive, purporting to offer investment advice, offers to buy shares at a discount, or offers of free company reports.
If you receive such approaches:
- Make sure you get the correct name of the person and organisation involved.
- Check that they are properly authorised by the FSA by visiting www.fsa.gov.uk/register/home.do
- Report the matter to the FSA either by calling 0845 606 1234.
- Be prepared to tell the caller to sling their hook and hang up – if they were selling double glazed windows or kitchens you would.
REMEMBER if you deal with an unauthorised firm, you will not be entitled to compensation under the Financial Services Compensation Scheme so you may lose all your money.
The FSA can be contacted by completing an online form at www.fsa.gov.uk/pages/doing/regulated/law/alerts/overseas.shtml
More detailed information on this or similar activities and other scams can be found on the FSA website
Remember two things – there is no such thing as a free lunch and if it sounds too good to be true, it probably is.