Boiler room fraud

The following Corporate Crime practice note provides comprehensive and up to date legal information covering:

  • Boiler room fraud
  • What is a boiler room fraud?
  • How does a boiler room operate?
  • What types of investment are being sold?
  • What do investigators look for?
  • How is a boiler room prosecuted?
  • Sentencing boiler room frauds
  • Cases considering sentences for boiler room fraud
  • Confiscation

Boiler room fraud

What is a boiler room fraud?

Boiler rooms are the names ascribed to high pressure sales environments. The idea is that the sales environment creates the pressure of a boiler room, with sales people deploying high pressure sales tactics to incite, cajole and pressurise investors into parting with their money in exchange for investments.

The terms 'boiler room fraud' or 'boiler room scam' are used to describe a particular type of fraud perpetrated using boiler rooms. In other words, a fraud carried on by means of distance selling, telemarketing and telesales, by which, victims are pressurised into buying products or investments on a false premise. The goods or investments purchased are usually worthless or worth substantially less than the consideration given. The sales people operating within the boiler room often use dishonesty and/or deception to make the sales and the victims are usually specifically targeted for their naïvety or vulnerability.

The Financial Conduct Authority (FCA) regulates the activity of companies operating in the UK financial sector, including banks, stockbrokers, financial advisers and spread-betting agents, and companies carrying out this kind of business without authorisation may be guilty of an offence under section 21 of the Financial Services and Markets Act 2000 (FSMA 2000). The FCA has a Financial Services Register listing all financial firms and individuals (including stockbrokers) who are authorised to operate in the

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