The police have arrested two men in connection with an investigation into illegal overseas boiler rooms last week in the FSA’s first criminal investigation into boiler room activities.
On Wednesday, October 31, two men were arrested following an investigation into Universal Management Services, which the FSA believes has been helping illegal overseas boiler rooms.
On Wednesday, investigators from the regulator, City of London police and regional police forces sear-ched properties at several addresses across North Yorkshire, Hampshire and County Durham and arrested two men.
The search and arrest warrants were obtained by the FSA, using its power to prosecute offences under the Financial Services and Markets Act 2000.
The FSA’s investigation into suspected criminal offences followed complaints of cold calling and highpressure selling, with consumers told by known boiler rooms to make cheques payable to UMS.
The FSA discovered that in a 12-month period, UMS, together with related organisations GS Asset Manage-ment and Continental Administrative Services, sent more than £5m of investors’ money overseas.
The FSA says it has also obtained orders freezing assets of up to £5,450,000 relating to this investigation.
Head of retail enforcement Jonathan Phelan says: “The is the first time that we have taken this action and it shows that we will not hesitate to use our powers to protect consumers, including launching criminal investigations where appropriate.
“However, investors should always be cautious when they are cold-called by any firm promoting or offering to sell shares and should first check to ensure that the firm is authorised by the FSA.”
UMS is not an authorised firm so investors do not have access to the Financial Services Compensation Scheme or the Financial Omb-udsman Service.
No one has been charged at this stage in connection with the FSA’s investigation, which is ongoing.