Warning to Shareholders Boiler Room Scams
Over the last year, many companies have become aware that their shareholders have received unsolicited phone calls or correspondence concerning investmentmatters. These are typically fromoverseas based ‘brokers’ who target UK shareholders, offering to sell themwhat often turn out to be worthless or high risk shares in US or UK investments. These operations are commonly known as ‘boiler rooms’. These ‘brokers’ 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 thisway;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. If you receive any unsolicited investment advice:
- Make sure you get the correct name of the person and organisation
- Check that they are properly authorised by the FSA before getting involved by visiting www.fsa.gov.uk/register
- Report the matter to the FSA either by calling 0845 606 1234 or visiting www.moneymadeclear.fsa.gov.uk
- If the calls persist, hang up
If you deal with an unauthorised firm, you will not be eligible to receive payment under the Financial Services Compensation Scheme. The FSA can be contacted by completing an online form at www.fsa.gov.uk/pages/doing/regulated/law/alerts/overseas.shtml.
Details of any share dealing facilities that the company endorses will be included in company mailings.
More detailed information on this or similar activity can be found on the FSA website www.moneymadeclear.fsa.gov.uk.
July 2008
J P Jenkins is part of Rivington Street Holdings.
Rivington Street Corporate Finance is regulated by the Financial Services Authority and is a PLUS Corporate Adviser Member.