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The Financial Services Authority (FSA) and City of London Police (CoLP) have employed a new tactic to discourage boiler room conmen from contacting UK investors.
Normally the boiler rooms cold call investors offering them non-tradable, overpriced or even non-existent shares, but the FSA and CoLP have turned the tables and cold called the fraudsters themselves to tell them they could face criminal prosecution.
The conmen were told in no uncertain terms that buying, selling and advising about share investments is a regulated activity requiring FSA authorisation, and that acting without that authorisation is punishable by up to two years imprisonment with the possibility of a fine.
The firms called include Redbridge Associates, Hoffman & Stanley, Wilkins Fairbrother and Marcus Jones International that feature on the FSA's unauthorised overseas share brokers list. It is believed that these firms are still active and targeting UK consumers.
This project was part of a joint strategic approach with CoLP to tackle the threat of boiler room fraud in the UK which is valued at £200million per year.
Margaret Cole, the FSA’s managing director of enforcement and financial crime, said:
"This is an excellent example of the FSA and City of London Police working closely and proactively to tackle the boiler room problem. It also shows how both enforcers are constantly adapting and using new tactics to fight share fraud and protect consumers.
“This exercise has sent a message directly to the fraudsters that we are intent on disrupting their activities and making life as difficult as possible for them if continue to target UK consumers."
Detective Chief Superintendent Steve Head, Head of Economic Crime directorate at CoLP, commented:
“As the National Lead Force for fraud we will continue to go after these fraudsters who prey on the most vulnerable in our society and cost the UK hundreds of millions of pounds of genuine investment.
“This joint operation is further evidence of how the City of London Police and the FSA are working together to target these dangerous criminal networks, no matter where they operate.”
Boiler rooms use high-pressure selling techniques to persuade UK investors to purchase shares in companies that are usually based overseas. Boiler rooms are not authorised by the FSA and act illegally by selling and promoting the sale of shares in the UK. In the majority of cases, the shares being sold are worthless and the boiler room vanishes, leaving the investor out of pocket.
