“For sale: boiler, €200 or nearest offer”

Investors in Spain have been subject to a ramping up in the activities of so-called boiler rooms in recent years leading the Spanish regulator to reinforce control measures.

Boiler rooms are unauthorised entities that have not been registered with either the CNMV or the Bank of Spain, hence are not allowed to provide financial services.

That is, if they have bothered to seek authorisation in the first place. Some may, but are turned down because of failure to show sufficient capital backing or adequate organisation. Either way, the boiler room operations are not attached to the Investment or Deposit Guarantee Fund, meaning investors are not protected in the event of insolvency (authorised entities contribute to this Fund).

“We offer you high returns with low risk” or “you did not earn money with your bank, you will with us” are some of the promises scammers use to hook investors, according to the CNMV.

In 2017 alone, the Spanish regulator warned of 53 unauthorised entities operating in Spain, a significant rise compared with the 35 warnings issued in 2016, and 38 in 2015.

The CNMV also warned of 476 unauthorised entities globally in 2017, 441 in 2016, and 217 in 2015.


Scammers normally cold call investors after taking their phone number from publicly available shareholder lists.

According the Spanish watchdog fraudsters are increasingly using social media channels to lure people to invest in scams involving complex financial products.

High-pressure sales techniques are also implemented by email or post, and once investors are lured, they can receive calls several times a day, in which they are urged to invest under the threat of missing out a unique investment opportunity.

The scammers might also try to sell investors shares or bonds in companies that do not exist. They also target those owning shares in a company and call them offering to buy those shares at a higher price than their market value.

“The scam will request the money upfront as a bond or other form of security, which they say they will pay back if the sale doesn’t go ahead – but you’ll never hear from them again.”

In this type of fraud, the investor is asked to pay a commission before receiving the offered financial asset. Fraudsters also use the technique of inflating the shares price of a small company announcing it as good news. Once the price skyrockets, scammers sell those shares leaving investors trapped.

These scams can be advertised in newspapers, magazines or online, as genuine investment opportunities. They may even offer a free research report into a company, or a free gift or discount on their dealing charges.


Since 2006, European regulators have warned of some 4,500 unauthorised entities, while just the Spanish CNMV has warned of some 300 boiler rooms.

According the Spanish watchdog, investment through unauthorised entities involves high risk of loss of capital, since they act outside the scope of the control of supervisory bodies.

Both the CNMV and other foreign regulators disseminate monthly warnings about those entities providing investment services without having the authorisation to do so.

“Only registered companies have obtained authorisation since they have provided proof that they meet certain requirements : enough capital, organisation and adequate resources ,etc. And they are subject to supervisory body controls,” the CNMV states.

However, CNMV’s powers are confined to the administrative sphere, so if it were to feel prejudiced by the actions of unregistered entities, it would have to resort to the ordinary courts of justice.

As a member of the European Securities and Markets Authority (ESMA) and of the International Organisation of Securities Commissions (IOSCO), the CNMV also publishes alerts issued by foreign securities regulators on general topics of interest to investors.

By its part, the UK’s Financial Conduct Authority (FCA) alerts on the ongoing trend of scammers trying to lure their victims online. “As people have become more sceptical of investment-related cold-calls and consumer habits have changed, we have seen investment fraud moving online and to social media. While their websites and profiles appear to be professional, they are all too often run by fraudsters who fix prices and pay-outs, or in some instances do not really place trades at all, before disappearing with innocent investors’ money.”


So far this year, the UK’s FCA has warned of some 160 boiler rooms operating in the UK, of more than 300 in 2017, and of some 327 unauthorised entities a year earlier.

Last year, the FCA said that more than half of scam related enquiries had been made by consumers aged 55 or over.

The regulator has also warned about the use of unauthorised pension introducer firms, which often pass a client over to a regulated adviser to sign off a pension transfer or investment in a high-risk product.

“We are also receiving an increased number of contacts about non-regulated bonds, where the investment is directly in the company, and there is no third party involved. Consumers have been asking if there is Financial Ombudsman Service/Financial Services Compensation Scheme protection, and what responsibilities the firm who approves the financial promotion has,” the FCA added.


The CNMV, fulfilling its investors’ protector role, offers a guide with ten tips aimed at preventing investors of potential scams, available on its website.

  1. If you receive one of those calls promising you a dream deal, you should verify that the entity is authorised and that the company has not been subject to warning by any financial regulator.
  2. Have an active attitude by asking information if you feel suspicious about the offer. Ask always for written information.
  3. Unexpected calls/emails, urgency to invest, entry bonuses, psychological pressure forcing an immediate decision, or mention or use of the CNMV logo, should make you distrust.
  4. Stay alert to unsolicited offers through your social network profiles.
  5. Be aware of complex products and high returns with low risk – distrust that offer.
  6. Pay attention to commissions.
  7. Make sure that the products offered to you exist and contrast the information they give you about the price of the securities they want to sell.
  8. Authorised financial intermediaries who offer you a product should assess your suitability and eligibility through questionnaires.
  9. If you cannot get your money back, stop making investments.
  10. Report to the CNMV/the corresponding regulator what happened and later to the police or the corresponding court.



The board of the International Organisation of Securities Commissions (IOSCO) – the international body that brings together the world’s securities regulators – published a report last year in March surveying the growing vulnerability of ageing investors to financial fraud.

The report “Senior Investor Vulnerability” reveals that seniors are at a higher risk than other investors of losing money to fraud or of being misled by others. It also indicates that the biggest risks to senior investors are unsuitable investments, financial fraud and their diminished cognitive capability which affects their financial decision-making. Complex products, deficient financial literacy, and social isolation pose additional risks to senior investors.

However, recent surveys conducted by some of the 38 watchdogs forming the IOSCO investors committee – including the CNMV – underlined that the usual victim of boiler rooms scams is far from being an investor with low financial knowledge, isolated and fragile. “He is usually a middle-aged man, married, with a good academic background.,” says IOSCO.

Another IOSCO survey from 2015, reported that according to the US regulator Finra, “Boiler rooms scams target often men aged from 55 to 65, with financial knowledge above the average, with a university degree and independent in the decision making.”

Eugenia Jimenez
Eugenia Jiménez speaks Spanish and is Iberia Correspondent for Investment Europe covering Spain & Portugal, as well as assisting with coverage of Italy. She holds a UK NCTJ- accredited Multimedia News Reporting course and studied Journalism at the University of Sevilla. She has worked for local media organisations in Sevilla and Málaga, mainly in broadcasting as a news reporter, among other roles. She has also worked for a local newspaper in Sevilla, reporting on current affairs, local government and culture.

Read more from Eugenia Jimenez

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