Small stock market investors have been warned to be aware of "boiler room" scam artists offering to buy their shares in companies at inflated prices, as some shareholders in CPL Resources became the latest to be targeted by fraudsters.
The Irish Times has been made aware of an incident whereby a New York-based finance firm was offering to buy small investors’ shares at a price of £10.36 (€11.70) each, an almost 75 per premium on the €6.75 at which CPL is currently in the market seeking to buy back some of its own stock.
The US firm’s website, which was set up in August, carried no information of how it is authorised or regulated, while a man who answered phone calls to the firm hung up on Monday when questioned about the nature of its business.
This newspaper was also told on Friday and Monday that the individual named in documents sent by the firm to a CPL investor, seen by this newspaper, was unavailable to take a call.
An email sent to the firm seeking clarity on a number of issues didn’t receive any response.
CPL put a warning on its website on Tuesday saying it “is aware that a number of small shareholders have received unsolicited contact concerning their shareholding” in the company.
“The company believes that these are not bona fide offers for shares and shareholders should be aware that these unsolicited share purchase requests are viewed as suspicious by the company,” it said. “Please act with extreme caution. If in any doubt, please contact your financial adviser.”
Incidents of small investors being contacted by fraudsters offering to buy or sell shares in publicly-quoted companies have been on the rise internationally in recent years. The UK Financial Conduct Authority said in a warning published in August that even seasoned investors have been caught out, with the biggest individual loss recorded by that country’s police force being £6 million.
Closer to home, Kilkenny-based nutrition group Glanbia warned in March that a number of its shareholders had experienced unsolicited and unauthorised approaches from overseas firms, using high pressure sales tactics.
Website warning
UDG Healthcare has also carried a warning on its website for more than two years, saying the offer to purchase shares will typically come with a request for bank details or money up front such as a bond or other form of security, with assurances of a refund if the sale does not go ahead. However, once the money or information has changed hands, investors are unlikely ever to hear from the scammers again, it said.
The fraudsters can obtain investor information by accessing publicly-available shareholder lists.
A spokesman for the Central Bank said the regulator "receives a number of queries and complaints from members of the public regarding unauthorised investment firms, commonly called 'boiler rooms' ".
"Such firms often cold call individuals and offer them investment services in relation to the purchase or sale of shares in another company. The return offered by such firms is usually very high relative to the initial investment made," he said, adding that suspected cases should be reported to the Central Bank and the Garda Síochána.
A spokesman for the Irish Stock Exchange said: "Anyone who receives correspondence of this nature should be vigilant. Check if the company or individual is on the list of authorised investment firms, which is available from the Central Bank's website, and obtain independent advance from a qualified adviser or stockbroker."
