Stocks Section

A New Offshore Broker Scam

August 2005

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;

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.

See Also

• Beware of the Offshore Brokers - They want to steal your money
• Watch out for the fake Regulators