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The National Fraud Intelligence Bureau (NFIB) within the City of
London Police is responsible for co-ordinating the national
intelligence picture for share purchase fraud, more commonly known
as boiler room fraud: a crime where investors are cold-called by
bogus stockbrokers and persuaded to either buy worthless or
non-existent shares, or to buy genuine shares at vastly inflated
It has come to the attention of the National Fraud Intelligence
Bureau that fraudsters are threatening investors with police action
if they refuse to go ahead with an initially agreed
We would like to assure investors that the City of London Police
do not and would not act as a debt collection agency in these
If you have been offered an investment and consequently received
a similar threat please inform your local police force
(City of London Police contact
If you think you may have been a victim of this type of fraud,
you should report the matter to your local Police Station or to
Action Fraud. Action Fraud is the UK's national fraud reporting
centre and also provides support and useful advice for victims of
fraud. You can report the crime online at
or by telephone 0300 123 2040.
A 'boiler room' is a bogus stockbroking company, usually based
overseas, which cold-calls investors and pressures them into buying
worthless shares. Historically, those targeted were older people
with previous experience of investments or share dealing, who
typically lost £20,000 each to the fraudsters; 50% of investors
today are aged over 65. The biggest individual loss to date
recorded by the National Fraud Intelligence Bureau (NFIB) is £1.2
In the current economic climate, boiler rooms are starting to
target victims who have redundancy money or those who are not
experienced investors, and are asking for smaller sums of money to
Those operating the boiler rooms have developed new strategies
to target investors, such as a promise to recover monies lost to
the original boiler room, or to purchase these worthless shares
(once an up-front fee has been paid). In addition, investors are
being encouraged to sell previously highly regarded 'blue chip'
company shares, such as banks and financial institutions and to
invest in green or new technology shares marketed by the boiler
rooms, or even to take out loans to fund new investments.
These fraudsters are usually well spoken and knowledgeable. They
are also persistent. They might call their victim several times
with offers of research, discounts on stocks in small overseas
companies, or shares in a firm that is about to float. Boiler rooms
make their money in one of two ways: by simply taking money and
walking away, or selling shares at vastly inflated prices and with
exorbitant dealing charges.
Police advice is not to accept cold calls, however persistent.
Always seek legal and independent financial advice.
The Fraud Advisory Panel
(www.fraudadvisorypanel.org, opens in a new
window) offers practical advice to consider before
purchasing shares, Often, shares are offered in USA companies that
have, or are about, to float on the stock market. These regularly
prove to be 'Regulation S' (or Rule 144) shares, which can
only be sold to non-US citizens and have other limitations. Any
company offering shares in connection with the American stock
exchanges should be checked at the US Securities & Exchange Commission (opens in a
Scams often have similar features that may alert you to the fact
that they are not genuine:
Please remember that any company, no matter in which country
they are based, must be registered with the Financial Conduct
Authority to offer shares for sale to people living in the UK.
A number of "recovery rooms" are now offering to assist
those defrauded by boiler rooms. They will approach a victim of
boiler room fraud and, for an upfront fee, promise to review their
case and obtain reimbursement from a European Court fund or other
legal avenue. Fees are often taken over the telephone by credit
card payment or through PayPal, and it is thought that the recovery
rooms purchase names of victims from the boiler rooms
Recently, recovery rooms have stated that they are working
either on behalf of, or in conjunction with, the National Fraud
Intelligence Bureau (NFIB), the UK Financial Conduct Authority
or the US Securities & Exchange Commission, in an attempt to
give validity to their scam. It has also been suggested that the
‘fund’ the recovery room seeks reimbursement from are monies that
the Police have restrained and failed to return to the original
the National Fraud Intelligence Bureau (NFIB) does not
work in conjunction with, or endorse, any financial companies,
legal firms or other organisations to return recovered funds or
represent investors, with the exception of the
Financial Conduct Authority. Any funds that are recovered
during an investigation are repatriated to investors under the
Proceeds of Crime Act and every attempt is made to identify
investors to benefit from such funds.
Police are only one of several agencies investigating
mass-marketing fraud, including the Financial Conduct
Authority; Trading Standards services; the Office of Fair Trading
and the Serious Organised Crime Agency in the UK, as well as
overseas law enforcement and regulatory organisations.
the National Fraud Intelligence Bureau (NFIB) assists in
co-ordinating the efforts of these agencies in the UK and overseas;
by collecting, analysing and disseminating boiler room fraud
intelligence; and supports criminal investigations. Each UK police
force is responsible for investigating reports of boiler room crime
in their police area, and the National Fraud Intelligence Bureau
(NFIB) assists by putting investigators and victims in touch with
each other, and by providing information packages on individual
boiler rooms to investigators.
During an investigation, each piece of information is followed
up, including telephone numbers, bank accounts, physical addresses
and Internet addresses. Often, fraudsters make use of serviced or
virtual offices to provide a prestige address; call forwarding
services to hide their true locations; or indeed simply make up an
address with which they have no connection, to lend an air of
authenticity to their operation.
the National Fraud Intelligence Bureau (NFIB) does not receive
routine notifications of arrests or boiler room investigations, and
legal procedure rules often prevent police from publicising the
arrest of criminals until after any trial is concluded; fraud
investigations are typically lengthy and can take several years to
reach a conclusion.
It is rare that monies paid to boiler rooms are recovered.
However, there are occasions where accounts are frozen in the UK or
overseas, from which victims of that particular boiler room can be
compensated. However, this requires a series of court applications,
although new legislation is now in place to make it easier for
police to recover monies frozen overseas.
Equally, when a fraudster is convicted, typically a confiscation
case will take place, under the Proceeds of Crime Act (2002), to
try and recover funds obtained through crime from the criminal.
The Financial Conduct Authority (FCA) regulates the
activity of companies operating in the UK financial sector,
including banks, stockbrokers, financial advisors, spread-betting
agents and so on. The FCA recommends checking its website
(www.fca.org.uk) both for a
list of boiler rooms and to find out if the stockbroker is
authorised to operate in the UK. The FCA is unable to take action
if the boiler room is not based or authorised in Britain, so
investors are vulnerable as they will not be able to claim
compensation from the FCA or the Financial Ombudsman Service if
something goes wrong.
Financial Conduct Authority website
The SEC is the American equivalent of the Financial Conduct
Authority and has a similar remit. If you are considering buying,
any US shares, please use the extensive resources available at the
SEC to research the company before purchasing.
Useful SEC website links:
There are many types of mass-marketing frauds; however, the
National Fraud Intelligence Bureau (NFIB) only deals with
share-related frauds. Other forms of this crime include:
Where a crime has occurred, you are advised to report it to your
local Police force or Trading Standards team; alternatively, the
Consumer Direct helpline will take a report and pass it on to the