Boiler Room Scams
Over the last year many companies have become aware that their shareholders have received unsolicited phone calls or correspondence concerning investment matters. These are typically from overseas based ‘brokers’ who target UK shareholders offering to sell them what often turn out to be worthless or high risk shares in UK and/or overseas investments.
The callers can be very persistent and extremely persuasive and a 2006 survey by the Financial Services Authority (FSA) has reported that the average amount lost by investors is around £20,000. It is not just the novice investor that has been duped in this way; many of the victims had been successfully investing for several years.
Shareholders are advised to be very wary of any unsolicited advice, offers to buy shares at a discount or offers of free company reports. There are a whole range of variations on the tactics they can use but the basic ‘nuisance’ factor is the same.
If you receive any unsolicited investment advice:
- Protect yourself and check out any investment thoroughly.
- Make sure you get the correct name of the person and organisation.
- Check that they are properly authorised by the FSA before getting involved. You can check at www.fsa.gov.uk/register.
The FSA also maintains a list of unauthorised overseas firms who are targeting, or have targeted, UK investors and any approach from such organisations should be reported to the FSA so that this list can be kept up to date and any other appropriate action can be considered. If you deal with an unauthorised firm, you would not be eligible to receive payment under the Financial Services Compensation Scheme.
You can find out more information about boiler room scams at http://www.moneymadeclear.fsa.gov.uk/tools/check_our_register.html.
You should be aware that if you hold a share certificate, your name and address details are shown on the public register and this is one of the ways that boiler room operators can obtain your details. You can protect your privacy by considering moving your shares into a nominee account. If you wish to transfer your holding into a nominee account, you should seek advice from your financial advisor.
Details of any share dealing facilities that the company endorses will be included in company mailings.