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FSA issues warning about new share scam

24 February 2010  |  2279 views  |  0 Source: Financial Services Authority

The Financial Services Authority (FSA) has issued a warning following the dramatic increase in overseas fraudsters selling shares using the names, registration numbers and addresses of FSA authorised firms and individuals.

The FSA has noticed a significant rise in this type of fraud, with crooks imitating genuine authorised firms to try and convince consumers of their legitimacy.

Recently the FSA has seen instances where an authorised firm's website has been cloned but with a few subtle changes, such as a different phone number or false email addresses.

Should anybody receive an unsolicited call or email from a firm which they are not a customer of, the FSA is recommending that people should take the following steps:

* ask for the contact details of the person calling you;
* check the firm or individual's status on the FSA register;
* call the firm back on the switchboard number provided on the FSA register to make sure that the call came from the legitimate authorised firm.

Anybody who has been contacted by a suspicious firm or has any doubts should report the encounter as soon as possible by calling the FSA on 0300 500 5000 or reporting it online.

Consumers also need to be aware that firms not registered with the FSA are not covered by the Financial Services Compensation Scheme. This means that should somebody invest through an unauthorised business, it is very likely they will lose their money if the firm goes bust or disappears.

Jonathan Phelan, head of the FSA's unauthorised business department, says:

"It is encouraging that awareness of share scams is now so high that conmen are having to come up with new tactics as it shows our strategy is working. Sadly, however, this also means there is a renewed risk to investors and a new type of scam for us to tackle.

"Our message remains the same: never deal with unauthorised firms. If somebody calls you out of the blue to promote shares, then you should be very wary of them even if they claim to be authorised by the FSA. If in doubt, make a report to the FSA; the more information we receive on a firm, the better placed we are to shut them down."

Share fraudsters, commonly known as 'boiler rooms', usual', ', usually contact people by telephone and use high pressure sales tactics to con investors into buying non-tradable, overpriced or even non-existent shares. Boiler rooms are unauthorised, overseas-based companies with bogus UK addresses and phone lines routed abroad.

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