Cold Calling Investment Scam (2003-07-22)

Summary

This is a public investor warning issued by the Guernsey Financial Services Commission describing a cold calling investment scam affecting local residents. It explains a two stage fraud pattern and advises investors on how to respond, rather than imposing new regulatory requirements on licensees.

• Initial scam: Overseas brokers cold call local residents to invest in thinly traded shares in small overseas companies, which then lose value and cannot be sold.
• Follow up scam: A different overseas broker later offers to buy back the shares at an inflated price but first demands a substantial refundable bond payment and the investor's bank account details, leading to further losses.
• Reminder on licensing: Firms conducting investment business in the Bailiwick must be licensed by the Commission.
• Advice to investors: Do not send money in response to such approaches and report cold calls or suspicious follow up offers to the Commission's Investment Business Division or Enforcement Division.
• Reporting losses: Anyone who has already paid money in these circumstances is asked to contact the Commission's Enforcement Division with details.

The notice cross references an earlier June 2002 warning on cold calling and notes similar alerts issued by other international regulators, but creates no new ongoing compliance obligation beyond the existing licensing requirement for investment business.

Key obligations

• Firms conducting investment business in the Bailiwick must be licensed by the Commission.

Applies to

firms conducting investment business, investors/local residents