March 14, 2008
On the 13 March 2008 the City of London Police provided details on the latest “Boiler room” scam to hit investors. In the biggest investor scam uncovered to date, fifteen thousand mainly British investors lost a total of £34.5million after being persuaded to transfer money to offshore accounts under the pretence of buying valueless shares in American companies.
The name boiler room scam is given to such operations due to the high pressure sale techniques used by the call centre operatives initiating the scam in order to persuade their target the opportunity is a “once in a life time” offer to make money. Although cold calling to sell shares is illegal, the criminals may try to get round this by writing first to say that a “salesman” will be in touch. At the time of the call the “salesman” will often be forceful, persistent and highly pressurising and as such create a sense of urgency that the share value is about to rise sharply and the opportunity must be taken immediately.
Equiniti, BT’s Registrars, offer the following advice to anyone who is contacted in a similar manner.
“Boiler Room Scams are often considered to target the older, less sophisticated investor with small share holdings but this is not always the case with larger investors also being caught out by such initiatives. The FSA advise that it is illegal for any stockbroker to cold call potential investors so this should sound an alarm from the outset of the call. Don’t be tempted by the promises of quick returns and if you have any questions about the validity of the person calling, end the call.”
If you receive any unsolicited investment advice further information can be found at http://www.btplc.com/Sharesandperformance/Newsandevents/Beonyourguard.htm and FSA guidance on the subject is given at http://www.moneymadeclear.fsa.gov.uk/news/scams/share_scams.html.