Armchair Investors Targeted by Sophisticated Fraudsters

Year Published: 2020

We have recently received reports from clients of a bogus shareholder scam in which fraudsters target members of the public holding shares in well-known blue chip companies.

The clients have been contacted by telephone by someone who introduces themselves as an agent from a share brokering company, often based in New York or some other financial centre. The corporate name they give even conjures up a convincing website, complete with credentials when Googled. They claim to act as a ‘transfer agent’ on behalf of a large overseas corporation which is in the process of a hostile takeover of the UK listed company and are contacting individual shareholders on their client’s behalf to discreetly buy their shareholding, in which they stress discretion is paramount.

The agent then normally asks the client to sign a non-disclosure agreement and contract which usually specifies a price significantly higher than the current trading price. The one stipulation is that the shareholder is asked to take out an insurance premium or bond of around £5,000 to guarantee the transaction and secure the price quoted.

The bogus scheme is relatively sophisticated often with fake contracts, websites, company logos and plausible contact details which have been created to give the impression that the broker is legitimate. At first sight it all looks remarkably believable and genuine.

The scams are normally operated by fraudsters who have done their homework by searching the register of members of the listed company and then cross-referenced it with directory enquiries to obtain a telephone contact number. They often prey on older clients and set artificial deadlines for them to sign up to the scheme. They can be persistent – sometimes calling several times a day in a bid to secure payment.

If you receive such a call, it is imperative that you do not hand over any personal details or succumb to the pressure to make any payment to the scammers. Instead, report the caller to the FCA or Action Fraud.

For further information and guidance, please contact Paul Tyrer on 01260 282333 or email [email protected].

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