With the current drop in interest rates many
small investors are seeking better returns for their money than
from simply leaving savings with banks or building societies.
Unfortunately this has led to a huge increase in reported Boiler
A Boiler Room is a bogus stockbroker, usually based overseas,
which cold-calls investors and pressures them into buying worthless
shares. They could be a small, unquoted company that the broker
claims is planning to list and, in extreme cases, the company will
not exist at all and the broker is simply selling shares in thin
air before taking the money and running.
In the current economic climate, Boiler Rooms are starting to
target victims who have redundancy money or those who are not
experienced investors. The biggest individual loss to date
recorded by the City of London’s Operation Archway is £1.2M.
Some victims have even been pestered to sell previously highly
regarded 'blue chip company shares', and to invest in green and new
technology shares marketed by the Boiler Rooms.
The fraudsters are usually well spoken and knowledgeable -
and very persistent.
Most frauds or scams share similar features which may alert you
to the fact that they are not genuine:
- if it sounds too good to be true it probably is
- you are asked for money up front to pay unexpected fees (such
as customs) before your 'prize' can be released
- you are asked to provide your bank account, credit card details
or other sensitive personal information
- you are put under pressure to reply immediately or the money
will be given to someone else
- you are asked to keep the details secret
Anyone who believes they have been a victim of a boiler room
scam, should contact the FSA and the
City of London Police. The police have a large task force,
Consumers that have been targeted by a boiler room operation can
report information via a form on the FSA website or by calling the FSA
contact centre on 0845 606 1234.