Consumer champion the Financial Conduct Authority (FCA) has closed down a suspected share boiler room allegedly scamming investors out of thousands of pounds.
The High Court granted the FCA an unlimited worldwide asset freezing order against First Capital Wealth Limited on the grounds the firm’s activities posed a serious risk to consumers.
The order bars the firm from selling or moving any assets, including cash in bank accounts and orders the directors to stop trading as investment advisers.
Tracey McDermott, director of enforcement and financial crime at the FCA, said: “The FCA has a duty to protect investors where we believe fraud or other financial crime is involved.
“Halting boiler rooms and other investment fraudsters is an important part of our work that often passes unseen. These firms rip-off investors and blur the lines between honest firms and crooks.”
Unregulated adviser
She explained that 20 investors handed over at least £650,000 to First Capital Wealth to invest in Berkeley Brookes LLC during the past six months.
FCA investigators suspect First Capital wealth was taking cash for investments in Berkeley Brookes with authorisation in breach of financial regulation rules.
The FCA will be writing to investors about their action – but points out that unregulated investment advisers are not covered by the Financial Services Compensation Scheme.
‘Boiler room’ is a term applied to unregulated firms who typically cold-call consumers offering exceptional returns on worthless investments. The phrase was first coined in America, where teams of salesmen would try to pressurise consumers to buy investments with false promises about the returns.
Warnings about bogus advisers
The FCA has also issued these warnings about bogus firms posing as regulated financial advisers:
Ava Capital Markets (clone firm)
Hometrader Group PLC
Dominic Nardone (trading as Trading Knowledge Limited)
Dealing with an unregulated firm
If you buy shares, save money or invest with an unregulated firm, you lose any protection offered by the Financial Ombudsman and the Financial Services Compensation Scheme. Broadly, you have no independent place to complain if the deal goes wrong and are unlikely to win any compensation.
Checking if a firm is regulated
Go to the Financial Services Register to check if a firm is regulated in the UK.
Reporting a suspected bogus adviser
Find out how to report unauthorised advisers on the FCA web site
