Share dealing scams: How to avoid being conned

Private investors buying shares are being advised to use nominee services to help protect themselves against a growing number of share dealing scams. These include cold calling from so-called ‘boiler rooms' and ‘recovery rooms', often based in countries which are out of FSA jurisdiction.

Figures from the City of London police which runs Operation Archway, cracking down on such scams, show that private investors have been scammed out of an average of £20,000 each. The FSA regularly warns consumers of boiler room scams and Halifax Share Dealing Ltd would also urge investors to utilise the protection offered by using a nominee service.

When individuals buy shares directly rather than through a nominee, their personal details are listed on the company's register of shareholders. The Companies Act requires this register to be available for legitimate scrutiny so that it is clear who owns the company. However this information can also fall in to the hands of unscrupulous operators of share dealing scams.

If investors buy shares through a nominee service their personal details are held by the nominee only and will not be added to the register of shareholders. A nominee service therefore provides an extra layer of security, it enables investors to buy shares through a recognised company - such as Halifax Share Dealing Ltd - which prevents personal data from becoming available to fraudsters.

Sue Concannon, managing director of Halifax Share Dealing Limited, said: "Confident tricksters will go to extreme lengths to 'scam' money and the sad fact is that many will get away with it. Our advice is to say ‘no' to unsolicited calls - they may not be calling from legitimate financial companies. Take as much information as you can and then check the company's credentials with the Financial Services Authority.

"If you are considering buying shares as a way of building up your financial portfolio, you can protect yourself by buying through a nominee. That way your personal details are kept out of the public domain."

Halifax Share Dealing Limited is one of a number of companies which provide nominee services through its execution-only share dealing services but, unlike some other companies, it does not charge a fee for its nominee services.

Halifax Share Dealing Limited is now one of the leading execution-only brokers in the UK with a rapidly growing client base which totals more than one million customers.