Lessons from Stockbroker Scams

Waiting around for the Arsenal Man U showdown this Sunday, I skimmed the Sunday Telegraph’s Business section.  Apparently, some shady cold-call operations are netting an obscene £600k a month conning unsuspecting gold-diggers.

The scams come in various guises, including:

• selling ficticious shares, even creating fake corporate websites to back-up wild stories
• selling types of shares that do not exist
• selling information purporting to give the early nod on amazing news/discoveries/breakthroughs and the like which doesn’t exist

The regulatory body, the FSA, calculate each person falling for the high-pressure tactics, which clearly leave morals at the door, loses £20k.

1 in 25 people take such calls.  Many I assume, giving in after relentless pursuit by such a con-artist.  Two quotes from the article show how success can be achieved by the scamming seller:

persistence – “often they will phone several times over a period of several weeks, without revealing any specifc details of the investment in an effort to build confidence in the scam”

culture – “the management propagate a get-rich-quick holiday culture to entice salesmen to turn a blind eye to the reality of their deeds”

The usual line trotted out in such situations, is that ‘if something sounds too good to be true, it probably is….’