Restricted US Shares Scams

Investment scams are growing, and everyone risks losing their lifelong saving. Recently, the FCA banned mini-bonds marketing, but many scammers continue to trade illegal mini-bonds. Though there is no typical definition for mini-bonds, an IOU is often offered as a high-risk, unregulated product. 

Similarly, the investment in US-restricted or controlled shares is often very expensive to trade, and investors are ignorant about the complexities involved in such trades. 

What is a Restricted or Controlled US Stocks Scam?

The restrictions are associated with the rule allowing US firms to sell stocks that do not meet the listing standards to non-US investors. Such shares are often offered at a discounted rate compared to normal US prices, and the broker keeps a differential.

When you buy restricted or controlled US stocks, you need to keep it for some time, often six months or one year, and you cannot sell it back immediately in the US since there are restrictions on its sale, or you pay to remove legal restrictions to sell, which can cost more than the price of the shares. 

In addition, you may have to pay the administrative fee to make the share tradable. Even when the shares are considered tradable, they may have no or little value if you have purchased them from an unauthorised broker. You may have to seek a private sale option available only in a limited market, and authorised UK brokers are unlikely to help arrange a sale.

Most such fixed-rate or high-profit options are offered for underlying assets, and some generate promised returns, but some may not give any returns. 

As a result, people are losing their hard-earned money to share trades where the scammers pretend to be stockbrokers who can help to earn from those assets, which, in reality, are mostly worthless or non-existent.

How to Protect Yourself?

• One should be cautious and look for tricks con artists use to pressure people into buying such options. 

• The most common way to get buyers is to tell them they can make a lot of money quickly; these get-rich-quick methods are often unreliable, where the buyers are shown the images of lavish lifestyles or luxury items bought by previous investors who made money through it.

• The tricksters post fake testimonials and buyers' reviews, and one should never rely on the testimonials provided by the seller firm. All such high promises of great profits with no risks are fake and target your money.   

• Firms may never contact buyers to invest in FCA-authorised options. Hence, one should always seek independent advice from an authorised financial expert before investing in share options.

• If you suspect you have been scammed, contact the Consumer Helpline number.

• Please beware of the follow-up scam where you may be offered by another party related to previous fraud to buy back for a small fee, or they promise to get your money back for some more money and personal/ bank details.