Investment association urges action on 'boiler rooms'
The Association of Private Client Investment Managers and Stockbrokers, a UK investment body, has called for the Government to act after a spate of complaints about unauthorised and illegal stockbroking operations known as "boiler rooms".
In a debate in the House of Commons today, the association will call for the European Commission to increase coordinated action between UK and other national regulators to put a halt to boiler rooms, which use illegal methods to persuade people to invest in high-risk shares. Boiler room employees typically push overpriced shares that are restricted for onward sale and have little or no realisable value.
David Bennett, chief executive officer at the association, said: "We want to see international cooperation to maximise efforts in tracking and shutting down of boiler rooms."
The call for action comes just days after Jonathan Phelan, head of retail enforcement at UK regulator the Financial Services Authority, said the amount lost to such schemes in the UK could be as high as "£500m or £600m each year".
A BBC investigation at the start of this month claimed there could be as many as 500 boiler rooms targeting UK citizens operating out of Spain.
Boiler rooms tend to operate from abroad where they are able to avoid the local regulatory authorities, selling volatile shares over the phone using high-pressure techniques, in which employees cold call would-be victims.
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