SIB warns of boom in post-recession investment scams
Friday 31 January 1997
One area the senior financial services regulator will investigate further is the rapid development of the use of the Internet for investment business.
New scams are likely to involve new and more complex forms of unauthorised collective investment, and also an increase in suspect schemes originating overseas.
There is evidence that firms and individuals who have been prevented from doing business in the UK may set up elsewhere in the European Union, said SIB.
If such firms gain authorisation in another EU state, they acquire a "passport "under the EU's Investment Services Directive to do business across national borders with UK investors. SIB said that when this happened it liaised closely with regulators in other member states to "share our understanding of standards of fitness and properness".
The warning came in SIB's annual planning document which said that during the coming year it would continue inquiries into firms and people involved in selling unauthorised foreign exchange investment schemes in the UK, as well as looking into the use of the Internet for selling investments.
Examples of unauthorised investment schemes tackled recently are ostrich farming and greyhound syndicates.
SIB's budget for the coming year is pounds 21.955m, compared with pounds 21.594m in the 1996-97 financial year and pounds 20.4m the previous year. SIB also published a consultative paper on proposals to strengthen the investors' compensation scheme.
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