Boiler Room Fraud - Operation Archway

City of London Police is responsible for co-ordinating Operation Archway, the national intelligence reporting system for mass share-marketing, or boiler room, fraud: a crime where investors are cold-called by bogus stockbrokers and persuaded to either buy worthless or non-existent shares, or to buy genuine shares at vastly inflated prices.

A 'boiler room' is a bogus stockbroking company, usually based overseas, which cold-calls investors and pressures them into buying worthless shares. Historically, those targeted were older people with previous experience of investments or share dealing, who typically lost £20,000 each to the fraudsters; 50% of investors today are aged over 65. The biggest individual loss to date recorded by Operation Archway is £1.2 million. In the current economic climate, boiler rooms are starting to target victims who have redundancy money or those who are not experienced investors, and are asking for smaller sums of money to invest.

Those operating the boiler rooms have developed new strategies to target investors, such as a promise to recover monies lost to the original boiler room, or to purchase these worthless shares (once an up-front fee has been paid). In addition, investors are being encouraged to sell previously highly regarded 'blue chip' company shares, such as banks and financial institutions and to invest in green or new technology shares marketed by the boiler rooms, or even to take out loans to fund new investments.

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