FSA refunds victims of 'boiler room' shares scam

The regulator described the cash recovery as "rare" good news for victims of share fraudsters who pressurise victims into buying shares which often can't be traded or don't even exist.

The 32 people, who will each receive an average of 8,400, were cold-called from abroad by people saying they worked for brokers Rothman Capital, Bishop Capital, Bernam Shore and Investor Relations Corp.

They were encouraged to buy shares in a company called Eduvest, with the promise of a significant return on their investment, but the stock was worthless.

The FSA took action against two individuals and seven businesses last November suspected of profiting from the scam. The regulator and police raided three premises, arrested one person, served injunctions and froze assets, although no-one has yet been charged.

Margaret Cole, the FSA's director of enforcement and financial crime, said: "We are extremely pleased to be able to recover and return money to investors who have been persuaded to hand over their money as part of a share fraud scam.

"Such good news is rare for victims who deal with unauthorised firms, as the money usually disappears without a trace."

The FSA has been leading a crackdown on boiler room techniques for a number of years.

Up to 11,000 UK shareholders were warned last December that their personal details were on a database that was being used by these fraudsters.

The FSA acquired the fraudulent database from Canadian authorities and discovered it contained personal details such as people's names, addresses and telephone numbers.

It is believed that the list – which fraudsters typically call a suckers list – had been sold on to a number of share fraud gangs.

The FSA is contacted by around 3,000 victims of boiler room scams each year after losing on average 20,000 each. But the FSA estimates that much remains unreported and that the real total is more likely to be between 150 million and 300m.