Share scams are often run from ‘boiler rooms’ where fraudsters cold-call investors offering them worthless, overpriced or even non-existent shares, or offer to buy their shares in a company usually at a much higher price than the market value.

General information

When the fraudsters offer to purchase shares, they will usually ask the shareholder to pay something up front, such as a bond or other form of security, which they say the shareholder will get back if the sale of the shares does not go ahead. They may also ask the shareholder to sign a form preventing them from disclosing details of the offer.

The ‘boiler room’ scam has developed over recent years and there has been an increase in reports of overseas fraudsters contacting shareholders to sell and buy shares using the names, registration numbers and addresses of authorised firms and individuals in an attempt to convince consumers of their legitimacy. While they promise high returns, those who invest usually end up losing their money.

Fraudsters can be very persistent and extremely persuasive and a 2006 survey by the Financial Services Authority reported that the average amount lost by investors was around £20,000. It is not just the novice investor that has been duped in this way; many of the victims had been successfully investing for several years.


How to protect yourself

Shareholders are advised to be wary of any unsolicited advice, offers to buy shares at a discount or offers of free reports into the Company.

  • Make sure you get the correct name of the person and organisation and make a record of any other information they give you such as telephone numbers.
  • You may wish to check that anyone offering to sell you shares or buy your shares is registered with the FCA at; however, these cold calls are unlawful and should be reported to the FCA:

If you deal with an unauthorised firm, you will not be eligible to receive payment under the Financial Services Compensation Scheme.