Share sale or boiler room frauds are committed by bogus stockbrokers, usually based overseas, who cold-call investors and pressure them into buying worthless or non-existent shares.
How do share sale / boiler room frauds work?
Typically, you are contacted out of the blue by a professional-sounding stockbroker who offers you investment opportunities that seem too good to be true.
You are also promised free research reports, special discounts and ‘secret’ stock tips. These offers are designed to reel in potential investors.
In reality, the fraudsters are cold calling as many people as possible, persuading them to invest in shares that are either non-existent or so worthless they are impossible to sell.
The fraudsters may provide false share certificates and other documents to make the investments seem credible.
Once the fraudsters have squeezed whatever money they can from investors, they disappear.
How can I recognise share sale / boiler room frauds?
- If you’re considering any type of investment, always remember: if it seems too good to be true, it probably is. High returns can only be achieved with high risk
- Share sale frauds tend to start with a telephone call out of the blue. Using hard-sell techniques, the fraudsters try to pressure you into making rushed decisions, giving you no time to consider the nature of the investment
- As with many fraudulent schemes, you are encouraged to keep your investment secret to ensure you receive maximum returns. This allows the fraudsters to hide the real nature of their scheme.
What should I do?
- Fraudsters aim to build an air of legitimacy around their business. This means they will often use technical jargon, impressive job titles and mock websites to look credible. Resolve any suspicions you might have about a scheme’s authenticity by investigating the company’s status and contact details
- The Financial Conduct Authority regulates stockbrokers based in the UK. You can check a stockbroker’s authenticity by visiting the FCA’s website and reading their list of unauthorised firms and individuals to avoid.
- Operation Archway, run by the City of London Police, is the national reporting system for share sale fraud. If you believe you have had contact with a share sale fraudster, complete a questionnaire and email or post it to the team.
- You should break off all contact with the fraudster immediately
- If you have given the fraudsters your bank account details, alert your bank immediately
- Keep any written communications you have received from the share sale fraudsters. This may help you give evidence to the authorities
- Because many boiler rooms are run from abroad, they are not covered by UK jurisdiction or compensation schemes. Unfortunately, therefore, you are unlikely to recover any lost investment
- Be aware that you are now likely to be a target for other frauds. Fraudsters often share details about people they have successfully targeted or approached, using different identities to commit further frauds
- People who have already fallen victim to fraudsters are particularly vulnerable to the fraud recovery fraud. This is when fraudsters contact people who have already lost money through fraud and claim to be law enforcement officers or lawyers. They advise the victim that they can help them recover their lost money - but request a fee.