Boiler Room Fraud
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What is Boiler Room Fraud?
Boiler room share frauds are the curse of investors. The operator will sell worthless shares at inflated prices to investors that are impossible to sell. A rising number of UK investors are being cold-called by fake stockbrokers looking to lure cash out of them. A broker, usually operating from an overseas firm, will cold call an investor and propose they buy shares in a particular company. The share has usually been ramped on online message boards. The company they are share dealing in will probably be listed on an illiquid market, so the shares cannot be sold, and the price will be hugely inflated.
What are the signs of boiler room fraud?
The firms will operate from boiler room ‘hotspots’, such as Spain, Switzerland, Dubai, Japan, Bermuda or the US, so they are outside of the remit of the Financial Services Authority. They will have a UK-listed address and a grand-sounding name to give an air of legitimacy. ‘Boiler room’ fraud owes its name to the highly pressurised sales technique employed by the broker. They can be forceful, persistent and highly aggressive. A common tactic is to create a sense of urgency about a stock, such as telling the investor it will explode any day so they need to invest quickly. For the 10 key signs of boiler room fraud, visit our recent blog post.
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Are you being investigated for boiler room fraud?
Sometimes those accused of this type of fraud are to some extent victims themselves. Have you been recruited in sales without knowledge you were party to a fraud? An eagerness by the Financial Conduct Authority to investigate and prosecute can sometimes lead to a case being built against a legitimate professional. Stockbrokers, bankers and others involved in financial services can find themselves embroiled in such accusations.
Although the architects of a boiler room fraud operation will be aware of the crime they are committing, often they employ unknowing staff. Defendants of boiler room fraud cases can include a number of administrators, office managers, telephone staff and salespeople who believed they were working for a legitimate company.
If you suspect you have been involved in a boiler room fraud operation, contact us as soon as possible. Barristers at St Pauls Chambers provide legal advice and strategy guidance on all aspects of financial crime, including boiler room fraud in the UK. Get in touch for further advice.
