Leicester Stockbroker Warns On Share Scams
Stockbroker Cave & Sons continues to receive alarming calls for help from local people apparently conned by ‘boiler room’ salesmen. The conmen, who earned their nickname from the high pressure sales techniques they use, trick the public out of millions of pounds each year by persuading them to buy shares in non-existent or worthless companies.
Cave & Sons’ warning comes as industry regulator, the Financial Services Authority (FSA), looks to crack down on ‘boiler room’ salesmen. Over the last 12 months the FSA has suspended eleven firms from trading, accusing them of deliberately targeting more vulnerable sectors of society, such as older, retired people and failing to explain the risks associated with risky and complex products. Unfortunately though, many of these scams are operated from abroad where the FSA has no jurisdiction.
In a typical scenario, an investor may receive an unsolicited call from a stockbroker purportedly based in the UK or the US, though usually they are based wherever the local law enforcement is most lax. Convincing and persuasive, the caller will encourage you to invest in a high-growth smaller company, often in advance of a major announcement or stockmarket listing that is likely to ‘double your money’. They may offer guaranteed profits but almost always fail to deliver. In many cases the companies you are investing in don’t even exist! Sophisticated boiler rooms often use names very similar to legitimate companies and have been known to set up dummy websites to con the unsuspecting investor.
Paul Murray, who heads up the Leicester office of Cave & Sons, said: “As is generally the case, if it seems too good to be true, it usually is. Be very careful when receiving unsolicited calls about investment. It is surprisingly easy to be duped by a convincing sales call and the promise of riches for very little risk.”
So how do you know if you’re being conned? According to Paul, the best advice is to check if the company selling you the shares is regulated by the FSA by calling their consumer helpline on 0300 500 5000 or by visiting www.fsa.gov.uk/register.
If they’re not regulated, even if they say they don’t need to be, then it’s likely that they’re committing an offence by trying to sell you shares and whatever happens you won’t be covered by any of the UK compensation schemes.