Central Bank warns public about investment fraudsters

The Central Bank has initiated a campaign aimed at warning the public about the growing problem of unsolicited approaches from bogus investment firms.

The strong performance of the economy and some recent high-profile public flotations have attracted the attention of fraudsters who "cold-call" members of the public and make what are often very convincing investment suggestions over the telephone, the bank said yesterday.

Most often the calls are from outside the jurisdiction. Would-be investors are encouraged to send cheques through the post and are sometimes issued with bogus share certificates.

Cold-calling, or the making of unsolicited approaches to members of the public, is contrary to rules laid down for investment firms in the Investment Intermediaries Act 1995. In some cases, the callers use company share registers to target persons who purchase shareholdings, while in other instances the callers simply pick names at random from the telephone book.

"The salespeople tend to be very professional," said a spokesman for the Central Bank. In some instances, people who have rejected suggestions that they buy particular shares are contacted again weeks later to have the increased price of the shares pointed out to them.

In a statement issued yesterday, the Central Bank advised people to deal only with authorised investment firms. It also announced the introduction of a dedicated reduced-rate information number (1890 200469), which the public can use to ascertain if an investment firm is authorised.

The bank requested that members of the public who have been cold-called by investment firms, whether authorised or unauthorised, should use the phone line to bring this fact to the bank's attention. The bank's information campaign includes press advertising pointing out that clients of unauthorised investment firms are not covered for compensation from the Investor Compensation Scheme.

Three types of unauthorised investment firm have come to the bank's attention. These are: foreign firms without a physical presence in the State, but operating here; Irish-registered non-resident firms (IRNR), which operate outside the State; and Irish-registered and domiciled firms providing services in the State.

Information about IRNR firms usually comes to the bank's attention by way of regulatory authorities in foreign jurisdictions, while the activities of unauthorised companies operating in this jurisdiction are usually identified by way of complaints from the public.

The bulk of the difficulties in this area to date has been with unauthorised foreign firms operating here through the use of telephone calls from the jurisdiction where they are registered.

Where such activities have come to the attention of the Central Bank, it has placed notices in the newspapers and contacted the authorities in the jurisdictions where the firms are registered. One unauthorised company, Globe Capital Group, has been put into liquidation by the Swiss authorities, and other companies operating here without authorisation are being investigated by the authorities in their jurisdictions.

In relation to IRNRs, the bank may seek to have them struck off or may alert the Garda to the company's activities. Similar possibilities exist in relation to Irish firms operating in this jurisdiction without authorisation. To date, there has been one prosecution under the 1995 Act.

Notices concerning 14 firms operating in this jurisdiction without authorisation have been published in newspapers since August 1998. The firms are: Investment Program Management (Belize); Dow Templeton & Associates (Turks & Caicos); Tasin & Co Inc (US); Ametron Consultants Ltd (Cyprus); Globe Capital Group (Israel/ Switzerland); WH Carrington (Bahamas); Pryce Weston Incorporated (Phillipines & BVI); Whale Securities (US); Quantum Financial Group (Panama); CSF Trust SA (Switzerland); First Federal Capital Inc (Philippines); Morgan Vanderbilt (US); United Global Partners (BVI); and Magnum Worldwide Investments (Spain).