02/03/2004 - 21:00

Share scams re-emerge

02/03/2004 - 21:00


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Share scams re-emerge

WITH the recent recovery in the stock market, share scams and share trading "get rich quick" schemes are making a resurgence.

Australian Securities and Investments Commission executive director consumer protection Peter Kell said over the past few months unlicensed offshore stockbrokers had re-emerged in the marketplace.

"They are cold calling and emailing Australian investors offering shares," he said.

"In the past few months they have targeted previous victims offering overpriced shares in start up companies."

Some offshore cold callers target previous cold called victims who may hold worthless or low value shares bought a few years ago.

The cold callers offer to swap those low value shares for shares such as Microsoft, supposedly on behalf of offshore investors who need a tax loss.

Once the investor becomes interested the cold callers ask for extra money, sometimes for ‘fees’ and sometimes for ‘options’ to get extra shares to close the deal.

"Once you send this extra money offshore it can be lost forever," Mr Kell said.

Other cold callers have been offering overpriced shares in start up companies.

Investors are told that a young company has developed an exciting new business that will soon be listed on international markets.

The investors are told they are being sold the chance to get in early by buying shares ahead of the wider public.

"However, in ASIC’s experience the share price will have been artificially inflated," Mr Kell said.

"In fact, the company never lists and the shares investors buy prove virtually unsellable and the share price collapses within a few months.

"Just a few years ago Australians lost at least $400 million to those offshore cold callers by buying shares at grossly inflated prices that later turned out to be worthless or impossible to trade.

"Get rich quick systems, often based on expensive share trading software are also re-emerging.

"We expect that as the property market cools there may be more emphasis on share trading schemes.

"We have warned consumers before about such schemes and the risks for inexperienced investors with expensive share trading software.

"Too often the past returns are inflated and the risks downplayed."




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