Stock scam warnings jump sharply in 2010

The Swedish Financial Supervisory Authority has put over 500 fake stockbrokers and other swindlers on its warning list so far this year, a significantly higher number than in the whole of 2009.

Stock scam warnings jump sharply in 2010
Fraud investigator Stockholm county Detective Inspector Peter Sundman, September

At the same time, the number of complaints that police receive about stock scams has also increased.

“There is an enormous amount of activity right now. It is actually due to a couple of new fake companies every day,” said Jan Green, an expert on so-called investment fraud at the Swedish Financial Supervisory Authority (Finansinspektionen, FI).

The warning list includes mainly fake stock brokerage firms, whose names sound reputable and are often reminiscent of existing established companies. Some of the most recent examples include First Geneva Wealth Management, Morgan Investment Management Group and Talvest International.

Fraudulent brokers contact their victims with lucrative offers, usually about investing in unlisted American companies where future prospects are described as excellent. In reality, the shares are generally worthless.

However, fraudsters do not just only pretend to be stockbrokers. On the warning list, there are also a large number of false authorities. They contact people that they have previously enticed to buy shares and offer various ways to help them – for a hefty fee, of course.

Recently, Luxembourg’s financial supervisory authority issued a warning for a fake version of its website.

“They are downright uncanny because they are well made websites that look good. Unfortunately, many actually fall for them,” said Green.

Stock fraudsters also follow the latest trends prevalent in the legitimate financial industry. Currently, as a result of the rise in gold prices, companies often offer trade in gold futures or shares in mining companies. There are even complete but false commodity exchanges on the internet.

“The terrible thing is that they succeed. They get people to bite into them,” said Green.

Police can attest to the economic boom for stock swindlers. The extreme workload at the specialist unit at the Stockholm county police combating investment fraud resulted in the safety ombudsman closing down the division last week.

“They are terribly active right now. Many will be contacted,” said Detective Inspector Peter Sundman, who has now resumed his work.

The group of four policemen led by Detective Superintendent Bernt Isaksson is currently working on five large investigations covering a total of a couple thousand claimants.

Another 200 cases remain high in the so-called balance. On top of that, the unit is contact by new victims on a daily basis.

“On average, we get at least four to eight calls a day,” said Sundman.

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Calls for special police tactics to be available across Sweden

The chairwoman of the Police Association West Region has said that police special tactics, known as Särskild polistaktik or SPT, should be available across Sweden, to use in demonstrations similar to those during the Easter weekend.

Calls for special police tactics to be available across Sweden

SPT, (Särskild polistaktik), is a tactic where the police work with communication rather than physical measures to reduce the risk of conflicts during events like demonstrations.

Tactics include knowledge about how social movements function and how crowds act, as well as understanding how individuals and groups act in a given situation. Police may attempt to engage in collaboration and trust building, which they are specially trained to do.

Katharina von Sydow, chairwoman of the Police Association West Region, told Swedish Radio P4 West that the concept should exist throughout the country.

“We have nothing to defend ourselves within 10 to 15 metres. We need tools to stop this type of violent riot without doing too much damage,” she said.

SPT is used in the West region, the South region and in Stockholm, which doesn’t cover all the places where the Easter weekend riots took place.

In the wake of the riots, police unions and the police’s chief safety representative had a meeting with the National Police Chief, Anders Tornberg, and demanded an evaluation of the police’s work. Katharina von Sydow now hopes that the tactics will be introduced everywhere.

“This concept must exist throughout the country”, she said.

During the Easter weekend around 200 people were involved in riots after a planned demonstration by anti-Muslim Danish politician Rasmus Paludan and his party Stram Kurs (Hard Line), that included the burning of the Muslim holy book, the Koran.

Police revealed on Friday that at least 104 officers were injured in counter-demonstrations that they say were hijacked by criminal gangs intent on targeting the police. 

Forty people were arrested and police are continuing to investigate the violent riots for which they admitted they were unprepared. 

Paludan’s application for another demonstration this weekend was rejected by police.

In Norway on Saturday, police used tear gas against several people during a Koran-burning demonstration after hundreds of counter-demonstrators clashed with police in the town of Sandefjord.