Warning to shareholders
In recent years, many companies have become aware that their shareholders have received unsolicited phone calls or correspondence concerning investment matters, which imply a connection to the company concerned. These are typically from overseas based ‘brokers’ who target UK shareholders. Two common approaches are:
(i) the caller offers to sell them what often turn out to be worthless or high risk shares in US or UK investments;
(ii) the individual is advised that there is an imminent offer from the company in which they hold shares and the caller offers to buy those shares at a price significantly above the current market rate. This may involve paying an ‘administration fee’ or transferring the shares to the caller company.
These operations are commonly known as ‘boiler rooms’. These ‘brokers’ (callers) can be very persistent and extremely persuasive. They often have websites to support their activities, their advice and the companies they purport to represent.
It is not just the novice investor who has been duped in this way. Many of the victims have been successfully investing for several years. Shareholders are advised to be very wary of any unsolicited advice, offers to buy shares at a discount or sell shares at a premium, and of offers of free company reports.
Advice on how to avoid share fraud and how to report a scam to the Financial Conduct Authority (FCA) is set out in a document prepared by the FCA in association with the Institute of Chartered Secretaries and Administrators Registrars Group. Please click here to view the FCA guidance leaflet ‘Be ScamSmart’.
If you deal with an unauthorised firm, you will not be eligible to receive payment under the Financial Services Compensation Scheme.