UK crackdown on financial conmen aimed at stamping out boiler room activities

Written by Ray Clancy

Friday, 17 December 2010 12:45

Britain’s financial regulatory body, the Financial Services Authority, has joined with police to adopt a new tactic to discourage boiler scams and cold calls share fraud conmen from contacting investors.

Normally the boiler rooms cold call investors offering them non-tradable, overpriced or even non-existent shares, but the FSA and City of London Police are now cold calling the fraudsters themselves to tell them they could face criminal prosecution.

The conmen are being told in no uncertain terms that buying, selling and advising about share investments is a regulated activity requiring FSA authorisation and that acting without that authorisation is punishable by up to two years imprisonment with the possibility of a fine.

The firms called include Redbridge Associates, Hoffman & Stanley, Wilkins Fairbrother and Marcus Jones International that feature on the FSA’s unauthorised overseas share brokers list. It is believed that these firms are still active and targeting UK consumers.
This move is part of a joint strategic approach to tackle the threat of boiler room fraud in the UK which is valued at £200 million per year.

‘This is an excellent example of the FSA and City of London Police working closely and proactively to tackle the boiler room problem. It also shows how both enforcers are constantly adapting and using new tactics to fight share fraud and protect consumers,’ said Margaret Cole, the FSA’s managing director of enforcement and financial crime.

‘This exercise has sent a message directly to the fraudsters that we are intent on disrupting their activities and making life as difficult as possible for them if continue to target UK consumers,’ she added.

Detective Chief Superintendent Steve Head, head of the City of London Police’s economic crime directorate said that these fraudsters who prey on the most vulnerable and cost the UK hundreds of millions of pounds of genuine investment will be pursued vigorously.

‘This joint operation is further evidence of how the City of London Police and the FSA are working together to target these dangerous criminal networks, no matter where they operate,’ he added.

Boiler rooms use high pressure selling techniques to persuade UK investors to purchase shares in companies that are usually based overseas. Boiler rooms are not authorised by the FSA and act illegally by selling and promoting the sale of shares in the UK. In the majority of cases, the shares being sold are worthless and the boiler room vanishes, leaving the investor out of pocket.