Belgium issues a new regulatory warning against three firms operating as boiler rooms
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Belgium’s financial regulator, the Financial Services and Markets Authority (FSMA), warned against three more companies seemingly operating as boiler rooms inside the country. The three firms, IWL Consulting, May Capital Group, and South Pass Partners, offer investment services to Belgian citizens. However, they are not authorized to do so, and their selling tactics have been highly aggressive.
FSMA warns users of a new wave of boiler room scams
The regulator published its warning yesterday, August 28, stating: “The FSMA, therefore, strongly advises against responding to any offer of financial services made by the companies listed above and against transferring money to any account number they might mention.”
The companies’ websites were blacklisted, and while one remained unavailable, two seem to be still functional, offering financial services advisory and wealth management services. One of the firms reportedly has over 12,000 clients, while its assets under management (AUM) exceed $5 billion. The other company claims that its success ratio is at 78% in an attempt to attract more customers.
Boiler room scams are not uncommon, and they typically revolve around fraudsters contacting consumers by way of email or, even more often, telephone. They would then offer to sell them financial products such as shares. They would employ aggressive and pushy sales tactics to get users to accept the deal, deposit their money, and leave it at the company’s disposal.
How do boiler room scams work?
According to the regulator, boiler rooms claim to be authorized financial and similar service providers. They create professional websites accompanied by forms that users are required to fill out. However, in reality, they are scammers who offer worthless products and services, and their only goal is to convince users to hand over their money.
They try to entice victims by suggesting that they start with a very low initial investment. If the users accept, they will soon see gains, encouraging them to take the next step and use more money. However, when they ask for their money back, the companies continue to claim that this is only possible by making even more payments and investments. They have also been known to claim that the new investments have been unsuccessful and that the money has been lost.
“The fraudsters often put the consumer under severe pressure (hence the term ‘boiler room‘), insisting that they keep making further payments. In the end, the consumer will never get the invested money back,” as the FSMA explained.
The regulator has seen a number of similar scams lately. It issued multiple warnings earlier this year, exposing financial services scams in addition to other boiler room scams. This is a universal scam that can be encountered around the world. One of the largest cases from 2023 was in the US, where the US SEC acted against a company that used the boiler room scam to trick over 300 investors into raising $35 million.
