“Hello, I’m a Stockbroker and have I got a deal for you!!”
This is Number 3 of an occasional series – usually these are about how crooks in the Financial Services Industry make money from your gullibility or your lack of attention to detail.
This particular scam usually involves a potential investor (you) and a telephone call from a “stockbroker” – usually somewhere in Europe or maybe the Americas. Recently, we have even had calls from as far away as the Philipines.
The stockbroker is not real – he is a highly-trained salesman whose job is to convince you that he is calling from a legitimate brokerage . He works from a very good highly-honed sales script. He is not reading from the script, he knows it by heart. He also has answers ready for all of your doubts.
Firstly, you may be wondering where he obtained your name. The usual source is Companies House or some other organisation which lists Director information. The information is usually in the public domain. This scam is aimed at people who appear to have money and/or who have already bought shares at some stage in their life.
The script asks you how you are , how you are keeping, what the weather is like etc. A compliment may be thrown in which identifies you as a big-hitting investor – something to massage your ego. The salesman will have identified himself as someone from say a well-known New York brokerage. This part of the “pitch” is called the icebreaker and is designed to make you semi-interested and to create a bit of empathy between you and the salesman.
He may then ask you how your current investments are doing and throw in a few technical investment terms which are designed to flatter you into thinking that you and he talk the same language. At this stage, he may also ask you about the approximate size of your investment portfolio.
Whether your response is negative or positive, he will figuratively take you by the hand and lead you into telling you about a small company that is about to undergo some sort of change.
The change can be the promise of a big contract with a very large company that you will definitely have heard of or possibly a takeover. Whatever it is, the change will guarantee a sudden and fast rise in the share price of that company.
He may give you a website where you can look at the company and another site where you can see the current share price.
Both sites are either fakes or the information given is false or non-existent.
He will then ask you to make an investment or possibly “groom” you by saying that he will call you back in a week and that meanwhile, you should look at the share price to see what happens to it. When he calls you back, he will tell you that if you had invested, you would have made X dollars but luckily for you, he either has another stock or maybe it’s not too late to invest in this one.
You may have telephone calls from the same company for a period of months or years, until you are on first-name terms. Remember, there is one rule:
NEVER EVER SEND MONEY TO THESE PEOPLE – THEY ARE INVESTMENT BANDITS AND YOU WILL LOSE YOUR MONEY.
Last year, it is assumed that British investors lost between £200-500 millions to these so-called stockbrokers. Most of the individuals who lost money were experienced investors.
Finally, if a deal sounds too good to be true, then it is.