FSA warning on new investor scams

Posted by admin on 19 August, 2008 under Business news | Be the First to Comment

Investors have been warned to beware of fraudsters targeting former customers of a stockbroking firm that was shut by the Financial Services Authority.

The FSA said at least 10 bogus “recovery” firms were cold-calling former clients of Pacific Continental Securities, which was closed last year.

The firms have been trying to trick people into paying a fee in exchange for offering to buy their shares.

The FSA said the firms were not authorised or permitted to do business.

“These firms offer to buy the shares at an attractive price but demand an advance fee,” the FSA explained.

“This is a scam – as soon as the fee is paid, the firm disappears with the money and without purchasing the shares,” it warned.

As well as offering to buy shares directly, the bogus firms also make equally fraudulent offers to put people in contact with other potential buyers.

The regulator said it was investigating the numerous complaints it had received and advised anyone approached in this manner to contact it.

Pacific Continental securities went bust in June 2007 after the FSA withdrew its permission to trade and told it to settle its remaining business.

In March last year the firm was identified by the BBC’s Money Programme as acting like a “boiler room”, a fake stockbroking outfit which uses hard-sell techniques to deceive people into buying worthless shares.

Boiler rooms usually operate from foreign countries outside the direct control of the UK authorities.

News reported by The BBC