Beware of Offshore Scam Brokers
Many UK investors are getting cold called from overseas ‘brokers’ offering them the chance to invest in stocks, currencies, futures & options that offer tantalising and easy money.
One of the ways these crooks operate is to blind people with science or complex sounding theory. Trading options on the Euro sounds exciting, investing in a small Californian start-up technology stock can often lead to mouths watering gains etc. But the clients are not getting rich because simply put the brokers are scammers who are in the business of stealing money.
Many people fall into the trap of dealing with these offshore brokers but there are some failsafe ways to protect yourself - .
- Only deal with financial firms that are located in your own country AND regulated by your country’s financial Regulator, which in the UK is the Financial Services Authority (FSA). Also, make sure you call the FSA (they have a support number on their website) to check out the firm especially if you’ve been cold called with a hot tip for an investment. FSA's website
- If the broker has an impressive sounding name then watch out. Below are some real-life examples of firms that are either banned from conducting investment business and/or are under investigation by Financial Regulators across the globe.
THESE BROKERS ARE VERY SUSPECT
(Impressive Sounding Names!)
Citicapital INC
Westar Royalty Management And Trading Corporation;
Global Progress Management And Trading Corporation
Conrad Group and Associate
Goldberg & Partners, Inc
United Capital Mgt., Inc
New World Financial Group Ltd.
Sherman Brothers Mgt. Ltd., Inc
Bradford Kempner Mgt. Services, Inc
Dukes & Company Securities Corp
Newport Pacific Securities & Mgt., Inc
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- If the broker talks about gains of 100%-500% as if they were easy to obtain then 99% of the time it's a scam. They're either going to invest your money in a fake company or in futures and options charging commissions up to 500% more than a regulated broker. Recently one company called Harrington Advisory Services which operates from Barcelona charged E54,000 in commissions on a E110,000 Euro/Dollar option deal. A fully regulated broker in London would have charged no more than £20 for this same deal!
- Use Google - If they are scammers they're likely to have pulled fast ones over many people. By searching with Google for the broker's name or company that they're pushing you'll usually find all sorts of discussions and messages. Talk with some of the previous victims, this is where the internet is now so powerful. The message board on the Trade2Win.com message board is always a good one to check out.
- If you know your way around the internet do a WHOIS of the broker's website to see where it is registered. If located in the Turks & Ciaos islands or another similar suspect Caribbean Island then that's another big red flag. Also, if it has a private registration (where the real owner’s name is hidden) beware.
- If the salesman are smooth talkers making it all sound so easy, then watch out. You should ask yourself a simple question; if the company that they're pushing is so fantastic with incredible potential, why are they cold calling someone like you who they don't know? The financial markets simply don’t work this way because the hot deals and easy money are always reserved for the best clients and the brokers personally, never strangers.
- If you do deal with an offshore firm realise that you have zero financial protection from the FSA. You will not be able to complain to anyone even the Police because unless there has been a massive fraud perpetrated (usually many millions) they do not have the manpower (most of the time) to get involved especially as the brokers themselves are not operating from within the UK.
Use These Two Failsafe Rules
If you use these simple rules you'll NEVER have any problems from dodgy brokers.
- Only do business through FSA registered financial companies that you have fully check out with the FSA, and
- NEVER do business with any broker that cold calls you or has not been introduced to you via somebody you personally know
Summary
Be very careful because these scammers are growing in number for the simple reason that because they operate from offshore locations (usually dodgy countries) it’s so hard to stop or even track them. Their businesses are also very profitable.
Also, realise that the salesman they employ are very very good and will use the natural greed that's within all of us to try and get us to invest.
But if you use common sense and follow the guidelines in this article you should be easily able to spot the scams.
See Also
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