There are dodgy websites and there are crooks in cyberspace but there are no new cons, merely old ones with an electronic twist. There is only one maxim you need to remember - if you don't understand it, don't invest in it, and always check the background of any investment you make before putting your money into it.
For example, last month the Antigua-based European Union Bank collapsed. Its Russian owners appear to have made for the exit with depositors' funds. The bank had touted itself in 1994 as the world's first offshore bank on the Internet, offering deposit rates three times those available in the UK. In reality it highlighted the old investment saw that what looks too good to be true usually is.
The Bank of England's website provides a comprehensive guide to putting your money into a bank with a reasonable expectation of getting it out again. The site also has a link to the Banking Ombudsman's site.
If you stick to recognised names you won't go far wrong but even then you could be at risk from copycat sites. Personal finance information website moneyworld.co.uk complained this month to the Securities and Investments Board (SIB), the City financial watchdog, about the activities of a share- pushing operation calling itself moneyworld.com. The latter had been sending unwanted share tips to thousands of users.
It is worth checking out the SIB website for its investor alerts on issues involved in web investing. The site also provides links to the websites of the City's major financial markets.
Imro, the Investment Management Regulatory Organisation, was the first UK financial regulator to set up shop on the web. Its site contains tips for investors. However, UK regulators trail their US counterparts on the web. The US Securities & Exchange Commission has a site which allows access to all the company filings made to it over the past four years.
Under UK law it is a criminal offence for non-EU companies to issue investment advertisements to a UK audience but prosecution in cyberspace is virtually impossible. The Personal Investment Authority, the main watchdog for investments sold to individuals in the UK, said in August it was keen to ensure that UK firms could take advantage of the Internet to reach their customers. The PIA requires firms to put risk warnings in all appropriate parts of their websites.
There are a number of US-based sites specialising in tracking cyber-cheats. Among them, Scambusters updates news on issues including junk e-mail, cyberspace pyramids and the "pumping and dumping" activities of share pluggers, who recommend shares in order for their price to rise, only to ditch them once they have made a quick profit.
It is getting easier to buy and sell investments over the Internet. If you deal with a UK company, the firm is subject to UK law and you have a measure of protection but be wary of opportunities touted by websites based outside the UK.
Bank of England:
Securities and Investments Board:
Investment Management Regulatory Organisation: www.imro.co.uk
Securities & Exchange Commission:
Scambusters: www.scambusters.comReuse content