A New Offshore Broker Scam

Online brokerage scam I

 

Watch out if you're a shareholder in an Aim or OFEX stock that's under-performing and get cold called from a non UK domiciled stockbroker offering to buy your shares at an inflated price, often double the market rate.

Basically it's nothing more than an advance fee scam from the offshore brokers.

How The Scam Works

• You get cold called by a stockbroker who says he's 'representing' somebody who wants to buy a controlling interest in the firm you hold shares in
• These calls will normally be made by someone very impressive in the 'Mergers & Acquisitions Dept' of some stockbroking firm that has an equally impressive sounding name such as 'Gulliver, Wright & Partners'
• In these scams the salesmen are often very good at spinning their sales pitch
• The shares in the firm are say priced at £1.00 but the buyout price being offered is £2.50
• However the 'problem' is that the mystery investor wants to take out a bond in case he can't buy enough shares in the company to get control
• The investor is offering to pay say 90% towards the cost of the bond but wants other shareholders to cough up the other 10% which will get fully refunded once the deal goes through
• Of course there is no deal, no investor and if you pay the money you will never see it again

Simple Advice

As ever if things look too good to be true they're most probably false and that's certainly the case with this new style of financial fraud. We've written at length over how to protect yourself against offshore brokers and the number one rule is;


Never do business with a firm that isn't based in the UK or FSA registered.
In fact FSA firms are NOT allowed to cold-call so if you do receive any call out of the blue especially promising easy money then 99% chance the caller is about to set you up for some scam.

Remember our 3 GOLDEN RULES

1. Never do business with ANY financial firm that calls you out of the blue, repeat NEVER (however plausible they sound, remember they're professional scammers of the highest quality)
2. Always check out the firm in question by calling your country's financial regulator* and checking them out. Whatever you do don't let the scam firm hoodwink you in thinking they are regulated by some fake regulator located in Switzerland etc
3. Use Google, Google is your best friend when it comes to playing detective, afterall you found this page didn't you......
If you follow these rules you'll be fine, but if you let your greed take control then you can kiss your money goodbye........
*For UK citizens ask the firm for their Financial Services Authority (FSA) registration number and then do a 'Firm Check on the FSA's website.

Summary

Watch out for the offshore brokers because they want to steal your money, and they're willing to use all sorts of tricks to achieve this goal. So to protect yourself here's a fail safe rule;


NEVER DEAL WITH ANY FINANCIAL FIRM THAT IS NOT REGULATED BY THE FINANCIAL SERVICES AUTHORITY (FSA)*

? Also, Check any firm that cold calls via the FSA's freephone helpline 0845 606 1234 (ask the firm in question for the company registered name AND their FSA number)
? In fact if you do get cold called then there's a 99% chance it's a scam
? This one is a GREAT TIP - Look at their website and call them back on their main switchboard number, if you always get an answerphone then you're about to be scammed
? Also ask the salesman who originally called you why the office switchboard is never answered by a proper person and have a good laugh at his/her excuse. You see once they've stolen your money they want to make it very hard for you to get hold of them, hence the number on the website is never answered by a real person!
? Note the client monies for an FSA registered firm will only be held in bank account in the UK. If you are asked to transfer money abroad there is a 99% chance they you'll NEVER see that money again
? Also, NEVER buy futures, options or any other complex financial instrument unless you fully understand them - If you don't know what you're buying you WILL lose your money
? Be very aware because the fake financial regulator trick is a good one, it will fool many people so be on your toes for other subtle scams
? Interesting Link - www.boiler-rooms.co.uk
PS. Follow this site using RSS - Free help & setup guide (takes 5 mins)

*Or similar financial regulator if you're based abroad, US = SEC, France = AMF, Germany = BaFin

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