Protect your investments from share dealing scams

09 September 2008 / by Daniela Gieseler
Private buyers who want to invest in shares ought to use nominee services rather than purchasing shares directly in order to avoid scams, including cold calling from so-called 'boiler rooms' and 'recovery rooms', advises Halifax Share Dealing Ltd.

Nominee services offer an extra layer of protection for share buyers as the buyer's personal details are held by the service only. By contrast, when individuals buy shares directly the company is obliged to list them on their register of shareholders.

However, this register has to be made available for legitimate scrutiny to disclose who the owners of the company are. As the details are easily accessible to anyone, fraudsters could abuse them for share dealing scams.

Figures from Operation Archway, run by the City of London Police in order to investigate such scams, show that private investors have been cheated of £20,000 each on average.

Sue Concannon, managing director of Halifax Share Dealing, warned: "Confident tricksters will go to extreme lengths to 'scam' money and the sad fact is that many will get away with it.

"Our advice is to say ‘no' to unsolicited calls," she added, "They may not be calling from legitimate financial companies. Take as much information as you can and then check the company's credentials with the Financial Services Authority."

Ms Concannon advised: "If you are considering buying shares as a way of building up your financial portfolio, you can protect yourself by buying through a nominee. That way your personal details are kept out of the public domain."

Most nominee companies charge a monthly fee or transaction fees or both every time shares or investment are bought or sold. Cost depends on whether the account holder is a regular or occasional trader.

In contrast to these companies, Halifax Share Dealing Ltd is one of the few execution-only brokers which do not charge fees for its nominee services with client base of more than one million customers.

© Fair Investment Company Ltd