Share sale and investment fraud

Share sale, boiler room, hedge fund or bond fraud involves bogus stockbrokers, usually based overseas, cold calling people to pressure them into buying shares that promise high returns. In reality, the shares are either worthless or non-existent.

You are usually 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.

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 quickly disappear.

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’re encouraged to keep your investment secret to ensure you receive maximum returns. This allows the fraudsters to hide the real nature of their scheme.

Fraudsters aim to make their business seem legitimate, so they will often use technical jargon, impressive job titles and mock websites to appear credible.

Are you a victim of share sale fraud?

• You’ve bought shares from somebody you don’t know over the telephone.
• To transact the deal, you’ve given them your bank account details.

What should you do if you’re a victim of share sale fraud?

• Report it to Action Fraud.
• Break off all contact with the fraudster at once.
• Alert your bank immediately if you’ve given the fraudsters your bank account details.
• Keep any written communications you’ve received from the share sale fraudsters. This may help you give evidence to the authorities.
• Because many boiler rooms are run from abroad, they’re not covered by UK jurisdiction or compensation schemes. Therefore, you’re 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’ve already fallen victim to fraudsters are particularly vulnerable to the fraud recovery fraud. This is when fraudsters contact people who’ve 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.

Protect yourself against share sale fraud

• If you’re considering any type of investment, always remember: if it seems too good to be true, then it probably is. High returns can only be achieved with high risk.
• If you’re suspicious about a scheme’s authenticity, you should investigate the company’s status and contact details.
• The Financial Services Authority regulates stockbrokers based in the UK. You can check a stockbroker’s authenticity by visiting the FSA’s:
  • Register of authorised firms
  • List of unauthorised firms and individuals:
  • List of unauthorised overseas firms
• Alternatively, call the FSA’s consumer helpline on 0300 500 5000.

If fraud has been committed, report it to Action Fraud.

Related link:
Investing in funds