Boiler Room fraud is when someone receives an unsolicited call or email, which then pressures them into buying shares. It is often targeted at people who already hold shares.
The Financial Services Authority has warned shareholders to be aware of receiving unsolicited phone calls or correspondence concerning investment matters. These calls are typically from overseas based ‘brokers’ who target UK shareholders, offering to sell them what often turn out to be worthless or high risk shares in US or UK investments.
These ‘brokers’ can be very persistent and extremely persuasive - a 2006 survey by the Financial Services Authority found that the average amount lost by investors was around £20,000.
Advice on avoiding scams
Shareholders are advised to be very wary of any unsolicited advice, offers to buy shares at a discount or offers of free company reports. If you receive any unsolicited
- Make sure you get the correct name of the person and organisation
- Check that they are properly authorised by the FSA before getting involved by visiting www.fsa.gov.uk/register/ and contacting the firm using the details on the register
- Report the matter to the FSA either by calling 0845 606 1234 or visiting http://www.fsa.gov.uk/
- If the calls persist, hang up. More information on Nuisance Calls can be be found here.