Share register fraud
- What forms does share register fraud take?
- What should I look out for?
- How can I protect my shares from potential fraud?
- What do I do if my shares are stolen?
- A company claims to want to buy my shares back - should I sell?
Answers
Q: What forms does share register fraud take?
Stealing shares or proceeds of sale on the disposal of shares
The fraudster sends a change of address notice to the Registrar, followed by an indemnity request for a lost share certificate. Once the duplicate share certificate has been sent out to the "new" address, the fraudster then requests an off-market transfer of the shares to a different account thereby effectively stealing the shares.
Boiler-Room fraud
You are contacted out of the blue by a "broker" offering you a great deal on shares, often in smaller companies you may not have heard of or possibly other investments such as futures, options or foreign exchange.
After buying the shares, you may have difficulty in getting the shares or their certificates. And when you try to sell them, you won't know if the price is fair - or you could find the price is inexplicably lower. If you do manage to persuade the firm to sell your shares for you, you may have difficulty getting the proceeds from the sale or be put under a lot of pressure to buy other shares with the money.
Q: What should I look out for?
A: Unsolicited phone calls or correspondence concerning investment matters which imply a connection with Pearson. These are typically from overseas based "brokers" who target UK shareholders offering to sell what often turns out to be worthless or high risk shares in UK or US investments.
When the Registrar receive a change of address notice they send a security letter to the old address to check that the request is genuine. If you receive such a letter and you are not changing your address you must contact the Registrar immediately on 0845 607 6838.
Q: How can I protect my shares from potential fraud?
A: If you receive any unsolicited investment advice:-
- Ensure that you obtain the correct name of the person and organisation and make a record of any other information they give you e.g telephone number; address.
- Check that they are properly authorised by the FSA before getting involved. You can check at http://www.fsa.gov.uk/Pages/register/
- Inform our Registrar on 0845 607 6838. They are not able to investigate such incidents themselves but they will record the details and pass them on to Pearson and liaise with the FSA.
- The FSA also maintains on its website a list of unauthorised overseas firms who are targeting, or have targeted, UK investors and any approach from such organisations should be reported to the FSA so that this list can be kept up-to-date and any other appropriate action can be considered. The FSA can be contacted by completing an online form at http://www.fsa.gov.uk/pages/doing/regulated/law/alerts/form.shtml or on 0845 606 1234.
- Transfer your shares to a Corporate Sponsored Nominee
The Corporate Sponsored Nominee (CSN) is a way of holding shares without a share certificate. Instead of registering as a shareholder directly on the register of members, your shares are held on your behalf by a nominee company. You are still the beneficial owner of the shares and instruct the nominee to buy, sell or transfer your holding on your behalf. A CSN is a nominee that is sponsored by Pearson particularly for its shareholders. The nominee has the backing of the company and so participants enjoy in practice the same rights as shareholders including receiving dividends and annual reports and playing a part in the company's general meetings.
Holding shares this way has a number of benefits:
You do not hold a share certificate, and so there is no possibility of having to pay a fee to replace it if it goes missing.
The shares are held electronically, making it possible to transfer or sell shares very quickly.
The nominee's name is entered on the register of members instead of yours, and your personal details are hidden from public view.
You can open an account by transferring shares into the CSN. To do this, you will need to call 0845 607 6838 to obtain a copy of the terms and conditions and an application form. Completed forms should be returned, together with your share certificate(s) to:
Equiniti, Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA
Q: What do I do if my shares are stolen?
A: If you have been a victim of share register or boiler room fraud, you should retain all material and documents provided to you, such as bank statements and contract notes. You should report the matter to the FSA (see Boiler room scams page) and also your local police, even if it is only for their information. Based on a number of complaints, the police may be able to assess the magnitude of this fraud. Testimonies by different people will help paint a fuller picture and co-ordinate their actions better. However, it is highly unlikely that your money will be recovered.
Q: A company claims to want to buy my shares back - should I sell?
A: It is likely that your name and details have been passed on or bought by another fraudster, pretending to offer you a lifeline by buying your worthless shares. There are many such operations which are sometimes known as recovery rooms. In fact, the only thing they ever recover is more money from the victims. You will notice that before you get any money from them, they require a payment of "a purchaser bond" or "guarantee" or a "fee" of some sort, allegedly to release the shares or to secure the deal. However, after these people receive their "fee", they just disappear and you will probably never hear from them again.