Beware the bogus brokers

It's not just novices and the gullible who are falling victim to financial scams - experienced investors are losing money too. Also, the government's latest climb-down on tax and a new policy that insures you against getting caught by a speed camera.

It's easy to scoff at people who fall for financial scams. Shouldn't they have more sense? But the most common victims of so-called boiler-room scams are experienced investors, who typically lose £20,000 each to the fraudsters. A boiler room is a bogus stockbroker, usually based overseas, which cold-calls investors and pressures them into buying worthless shares. Their favourite targets are middle-aged men with previous experience of buying shares, whose names they find on share registers.

The fraudsters are usually well spoken and knowledgeable, says Richard Evans in The Sunday Telegraph. They are also persistent. They might call their victim several times with offers of research, discounts on stocks in small overseas companies, or shares in a firm that is about to float. Boiler rooms make their money in one of two ways. They might simply take your money and walk away. Or they might sell you shares, but at vastly inflated prices and with exorbitant dealing charges.

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Naomi is a money expert and personal finance journalist with more than 20 years of experience in the industry. In her time she has written for The Times, Herald Scotland and MoneyWeek, and Naomi is currently at MoneySuperMarket as a money expert. Naomi shared her expertise on personal finance topics from travel insurance to the best savings accounts on MoneyWeek.