Authorities uncover second major boiler room shares scam in recent weeks

News - Funds

Written by Ray Clancy

Tuesday, 16 March 2010 09:21

The police and the UK’s financial watchdog have uncovered a second massive shares scam and warned 1,000 investors that their personal details are on a master list.

It is the second major boiler room fraud that has come to light in recent weeks and the Financial Services Authority and the City of London Police fear that fraudsters targeting investors to sell them worthless shares is on the increase and they are warning people to be vigilant.

The latest list contains the names and phone numbers of about 750 people and the names and addresses of 250. The list was discovered by the FSA and CoLP as part of Operation WARN, which was launched in February.

The letter explains what people on the list can do to protect themselves from the fraud, while phone calls from the FSA, to those on the list without addresses, offer guidance on how they can protect themselves, or what they should do if they have already invested.

The FSA will not ask for any personal details from the people on these lists, so any calls requesting personal information should be treated with caution, a spokesman warned.

Share fraudsters usually contact people by telephone and use high pressure sales tactics to con investors into buying non tradable, overpriced or even non-existent shares. These share fraudsters, commonly know as ‘boiler rooms’, are unauthorised, overseas based companies with bogus UK addresses and phone lines routed abroad.

Dealing with unauthorised firm means you do not have access to the financial complaints and compensation schemes, warned Jonathan Phelan, head of the unauthorised business department at the FSA.

‘This is the second master list we have obtained in as many months. Our sources indicate that the list is a new one and still in use by the fraudsters, so by contacting people on it we hope to cut these boiler rooms off at the pass,’ he explained.

‘Legitimate share dealers and brokers will not normally cold call people offering to buy or sell shares, so if you get one of these calls just hang up and report it,’ he added.

‘The key message is that if it sounds too good to be true, it almost certainly is. This is the second such list we have identified in a short space of time. Preventing people from becoming victims of these insidious criminal networks is an enormously important aspect of our work,’ said Detective Chief Superintendant Steve Head, head of the City of London Police’s Economic Crime Directorate.

Shareholders and other consumers can avoid becoming victims of share fraud by hanging up the telephone if they get an out of the blue call offering them shares; checking that anyone offering to sell them shares is registered with the FSA; calling the company back using the details on the FSA register to verify their identity; and reporting any company that cold calls them to sell shares, to the FSA or the Police.