Infofinance announcement: Alert on share fraud

Infofinance has been receiving many reports and complaints about how traders were scammed. We contacted FSA and found out a master list of 50,000 people at risk of being conned with useless or overpriced shares

The Financial Services Authority (FSA) has issued an alert on share fraud, warning almost 50,000 people that they could have been targeted by fraudsters. With the average boiler room victim losing £20,000, the FSA said millions of pounds are at risk of being invested in the scam.

Alerts from FSA about share fraud

The FSA has recovered a "master list" of names, addresses, and telephone numbers used by boiler room fraudsters. The 49,387 individuals on the list may have been contacted out of the blue and offered worthless shares, the FSA said.

Boiler room operatives usually contact investors by telephone to con them into buying overpriced shares or shares that do not even exist. The fraudsters are unauthorized and usually based overseas, operating fake UK addresses and phone lines routed abroad. The greatest concentration of targets is in London, although there are a significant number based in Scotland and the southeast of England. The list is thought to still be in use by fraudsters operating in the UK and abroad, and is likely to have been circulated between different boiler room networks.

The FSA is writing to every person on the list to let them know they are on it and to advise them on how to avoid being scammed. Margaret Cole, the FSA's managing director of enforcement and financial crime, said: "So far this year we have contacted 95,000 people across the UK to warn them about the risks of investing via boiler room fraudsters.

"This latest list is the biggest we've ever recovered and we are contacting every single person on it in the hope we can stop people losing money. Even if only one in 10 we contact heed our warning it could mean around £96m is not invested in these scams.

"Boiler room fraudsters often sound like the real deal so it's easy to be drawn in by their professional and high-pressure sales tactics. In reality, the shares are worthless or don't exist and the money is lost forever."

The FSA said it recovered the list from its intelligence work with counterparts in the US, Homeland Security Investigations, and the Internal Revenue Service – Criminal Investigation (IRS-CI).

The FSA's alert contains tips to help consumers to avoid becoming share fraud victims. Consumers should:

•  hang up the telephone if they receive an out-of-the-blue call offering them shares;
•  check the FSA Register and infofinance.com to see if the person selling shares is authorized to do so;
•  call the company back using the details on the FSA Register to verify their identity;
•  make additional checks to confirm that they are dealing with an authorized or registered firm and have the correct contact details, such as checking on the firm's website, with directory inquiries or Companies House;
•  report any company that cold calls them to sell shares to the FSA or the police.

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