Boiler room scams – scams of shares and bonds

Fake Brokerage For Untrustworthy Bankrupt Funds

Investors remain vulnerable and caught up in too-good bubble offers despite the risks. Proactive internet monitoring is required to spot suspicious adverts that claim to earn huge.

Such adverts appear legitimate where people are promised 8 to 10 per cent returns in a year and are given attractive marketing brochures or reports to support the claim.

People lost life savings in such crimes. They were told the funds were invested in reliable blue-chip firms, and they were given fake dividend payments that made them believe the offer and further invest in it. When the victims stopped further investment, they stopped giving the dividend, and the broker became unavailable.

Most targeted victims were elderly, persuaded by the scammer to believe it was a genuine and trusted agency. Some victims got expensive exit strategies where they were asked to pay huge amounts to get their money back. 

Sometimes, the market options are overpriced, even when the firm is bankrupt. Fraudulent brokers offer such bonds (or stocks) to unsuspecting investors. The scammers sell worthless options to investors pretending to be experts who can predict huge future gains. Many buyers have lost a huge share of their pension money in such offers. 

How Does It Work?

The fraudster asks the victim to send money quickly to avoid missing a profitable deal in the market, and they get all your details and often apply huge pressure to finalise the deal early.

They hold meetings, send professional-looking messages, emails and conduct seminars to tell you about the offer. They publish adverts in magazines and newspapers and offer registered reports about the firms to ensure the investors allocate a lot of money to the option.

They may also offer discounts or gifts for those who make early decisions. They seek fund transfers upfront and claim the prices are higher than market rates because of growing demand. When the victim transfers money into the brokers' account, they become unapproachable. 

Such firms are often a clone of the originally approved site and may use the FRN and address of the authentic site to get victims' money. Nevertheless, they may be a replica of the authorised firm based overseas – often unapproachable. 

The boiler room is often used for outbound calls where the executives/salesperson uses unfair methods to sell penny stocks or other useless options. The same team uses different guises, fake addresses, and identities to operate anonymously overseas. 

They use cold calling, and the marketing pitch is searchable and gets new buyers. They also use the pump and dump mechanism, where the rates of assets are artificially inflated to convince the buyer, and when the demand goes up, they tell the victims their holdings are getting profits, and then they dump it before the price goes down. 

How To Avoid A Loss?

• Seek trades only through FCA-backed firms that will not ask/pressure you to buy into certain options. They do not promise huge profits and do not call to sell/buy bonds or shares.

• Always get the FRN number, seek the original site, and check the warning list of the site. Register through authorised sites, not on links sent by unknown mail. 

• Never submit to pressure tactics; check the authorised money adviser services to get independent advice. 

• If you have lost money, report it to the regulatory / government website. Always be cautious of the follow-up schemes where they offer legal services, where an unknown person wants to help you by providing legal services for a fee or free of cost to get your money back.

• If you agree to any such service, inform the regulatory authorities about the follow-up messages.