UK Firm Closed Down For Assisting In Boiler Room Scams

by Robin Pilgrim, LawAndTax-News.com, London

28 August 2006

It emerged last week that the UK's High Court has placed Securetrade and Title Company Limited (STT) into liquidation after the company assisted a number of unauthorised overseas firms, commonly known as boiler rooms, which were unlawfully promoting and selling shares to UK investors.

The order was made as a result of a winding-up petition presented by the Financial Services Authority. The regulator submitted to the Court that STT had arranged investment deals without authorisation under the Financial Services & Markets Act 2000. The petition was not opposed by STT.

The FSA believes around 500 investors, paying a total of GBP4 million, arranged share purchases through STT.

The FSA found that STT acted as an 'escrow agent' to several boiler rooms, including one based in Barcelona called Black & White Investments SL. Once the boiler rooms had cold-called UK investors and convinced them to purchase shares, they passed investors' details to STT who posted stock purchase agreements to them. Investors returned the signed stock purchase agreements and payments to STT who then issued, or arranged the issue of, share certificates.

STT also distributed money to the boiler rooms and to those companies whose shares were issued. Neither STT nor Mr Brian O'Brien, who acted as if he were a director of STT and was principal contact for the boiler rooms, was authorised by the FSA to arrange investment deals.

Jonathan Phelan, Head of Retail Enforcement at the FSA, explained that:

"This action shows that where part of a boiler room's operations takes place in the UK, the FSA can and will take direct and decisive action to protect consumers.

"Investors purchased shares, with the assistance of STT, which are not currently listed on a stock exchange and they may have difficulty selling their shares or recouping their investment. Unfortunately, because STT was not authorised, investors will not have access to the compensation and complaints schemes."

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