Florida investment scam highlights dangers of ‘Boiler Room’ fraud, says Brewin Dolphin

14 March 2008

Brewin Dolphin, the UK’s largest independent provider of private client investment management and financial planning services, has today warned investors to be on their guard against so-called ‘boiler room’ fraud following the exposure of an estimated £35 million scam in Florida against around 15,000, mainly elderly British people.

The private client investment management and financial planning firm is reminding investors of the benefits of transferring shares to nominee accounts, which removes their name from the public domain, making them invisible to fraudsters.

Charlotte Black, Director of Group Corporate Affairs, Brewin Dolphin said: “It is crucial investors ensure they only trade through companies that are fully compliant with FSA regulations. Investors should only accept financial advice or enter into transactions with qualified financial advisers. With a bewildering array of investment options available, investors should seek professional advice to ensure the financial products selected are tailored to their own needs and risk profile.”

Brewin Dolphin has warned in the past about the dangers of ‘boiler rooms’, and indeed, how to avoid falling foul to fraudulent activity. Its legal department works closely with the Financial Services Authority (FSA) to prevent clients, and the industry, from becoming victims to financial fraud.

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About ‘Boiler Rooms’:

The objective of boiler rooms is to sell shares that either have no value, or if they do have value there is most probably a lock-in period or the price will be vastly inflated. The criminals steal funds through making a high pressured cold call to the investor, whose details are often obtained from shareholder registers at the Companies House. The unsuspecting investor is persuaded into parting with their hard-earned money, with the belief that they are on the verge of seeing their shares rocket in value. In fact, the laundered money goes directly into the pockets of the fraudsters.

One of the most common scams is the request for assistance in transferring foreign money (advanced fee fraud). All that is required of you is the use of your bank account, into which impressively large sums of money will be transferred and then withdrawn, leaving behind a residue of between 10% and 20% of the original sum. In reality what actually happens is that, just before the transfer takes place, you will be asked to pay an advance fee in order to set the deal up and prove your worth. If you pay, you will a) never see your money again, and b) receive a further demand(s) for cash. If you do not cooperate at this stage, your bank account will be emptied.