Beat the liars on the line

As long as you are an investor, you are a target for financial fraudsters. Like many other Investors Chronicle readers, you may have received phone calls from bogus, but plausible sounding stockbrokers or investment managers.

The latest rogue outfit is attempting to pass itself off as Invesco Perpetual, the country's biggest retail fund management group. It is trying to sell two fake funds - an Invesco Asian Precious Metals Fund and an Invesco Gold and Precious Metals Fund via websites www.invescoperpetualfunds.com and www.invesco-perpetualfunds.com.

The Financial Services Authority is warning that these firms are not authorised to conduct investment business in the UK and have nothing to do with the Invesco group of companies based in Henley-on-Thames, Oxfordshire.

Following my piece about last week, lots of readers got in touch to describe their dealings with the share fraudsters. Plus, we have the first poem (probably) ever penned about the

YOUR SHARE SCAM EXPERIENCES

Some of you are good at spotting the scamsters.

Ian Kennedy says: "I have read the Investors Chronicle for many years, so I am on the alert for scams. Quite recently, I had a cold call from someone offering to buy the shares I hold in the Octopus Eclipse VCT. The caller claimed he was making a takeover bid for the VCT. On this occasion I simply replaced the phone. I did, however, report the call to Octopus who confirmed it was a scam."

James Pascal says: "I was cold contacted by Pacific Continental (as they called themselves) to buy a tranche of rubbish which they said were wonderful mining companies. However, I never invest in a company without reading the most recent annual report. They could not provide the name of the company registrars. I never got seriously involved because the number of alarm bells that rang kept on increasing - cold calling, desperate to sell me shares, no neutral back-up information and no background information on the brokerage."

One reader who wants to remain anonymous has been persuaded by five boiler rooms to part with money - so far with no return. One cost him £70,000 and is the subject of a case to be heard at Southwark Crown Court in January 2012. Another cost him £50,000 back in 2005. One of the more interesting ones involved an organisation called First Zurich, based in Surich. They phoned him several times asking him to invest in Quantum Fuel Systems Technologies Worldwide Inc (QTWW), a company listed on Nasdaq. Although he invested $17,386, he has never seen either the shares or the money. "I am 70 years old and have been investing since Wm Morrison first floated on the stock exchange in about 1970," he says. "I was taken in simply because I did not believe anyone could tell such blatant lies. I always thought that the City was inhabited by honest men whose word was their bond."

Another tells us about a scam he was involved in last year. The offer was to purchase his shares in African Consolidated Resources. He was induced to subscribe for some warrants attaching to the shares and then putting up the tax due to the Internal Revenue Service (IRS, the US equivalent of HMRC) on the profit which would be returned to me in due course. The company behind the scam was JM Finance, based in Montreal. "Losing circa $90,000 was bad enough, but I found the reaction of the police and Financial Services Authority deeply frustrating," he says.

"I approached the City of London Police, who had set up Operation Archway to specifically investigate fraud, but all they did was refer me to the Met who, whilst sympathetic, did not have the manpower to look at international fraud. What was really frustrating was that my case was still hot at the time as my 'controller' was intent on getting his pound of flesh by demanding that tax due to the IRS had to be met before the proceeds from the sale of my shares could be released. The FSA seemed only concerned with giving 'good advice' and not interested in the detail."

"THE CALLS ARE NOT THE ISSUE"

The calls alone can be a major nuisance - reader Andrew Bebbington says he sometimes receives as many as 10 in one week and sometimes the same person will call several times in a day. But as another reader at the IC Roadshow said to me: "The calls are not the issue. We all get the calls. The problem is how to stop them."

First, make sure you are subscribed to the Telephone and Mailing preference services. These will help stop UK-based fraudsters contacting you. However, the overseas calls are more difficult to stop.

The main way the bogus overseas stockbrokers get your details is via shareholder registers. It is perhaps time the law is changed to protect small shareholders' details being disclosed without consent (as there is for the Electoral Roll, which is also a public document).

You could minimise the chance of your name being passed on to a boiler room via a shareholder register by holding your shares electronically in a nominee account. You still own the assets, but they are 'beneficially held' for you by the nominee company.

Nominee accounts are subject to very strict controls and procedures, but they come with other risks and are unpopular with some investors. In the event of your stockbroker going bust, it may take months to retrieve your shares, during which period you would not be able to sell them.

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