'Boiler room' scam warning



Shareholders of Octopus Investments venture capital trusts have been warned against a third party using its name in part of an illegal ‘boiler room’ scam.

The company says it believes its shareholders have been contacted with offers of shares in high-risk and even fictitious companies.

Typically, shareholders receive an unsolicited phone call concerning their investments, usually from overseas-based brokers, offering to sell them risky or worthless shares in UK or US investments. These operations are known as ‘boiler room’ scams.

The Financial Services Authority says this is not uncommon and several VCT companies have been targeted.

A spokeswoman for Octopus says unfortunately these type of scams happen across the VCT market and although Octopus is keen to be "straightforward and provide customers with as much information as we can", it’s sometimes impossible to know the numbers affected as victims can be unaware they’ve been scammed.

The FSA issued guidelines in May for shareholders and most VCT providers, including Hargreave Hale, Matrix and Albion VCT, have notices on their websites with instructions on what to do if shareholders have been a victim to such a scam.

The FSA warns that brokers involved with the scams can be very persuasive and aggressive. A 2006 survey found the average amount lost by investors is £20,000 and the regulator warns: ‘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’.

There is a list of unauthorised firms to be wary of on the FSA website. If you deal with them and do fall victim to a scam, you will not be able to benefit from the Financial Services Compensation Scheme and could have no way of regaining your money.




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