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FSA/PN/101/2007
25 September 2007

Two UK based firms, Chesteroak Limited (Chesteroak) and Bingen Investments Limited (Bingen), incorporated in Gibraltar, have been placed into compulsory liquidation by the High Court for assisting boiler rooms.

The boiler rooms were unlawfully promoting and selling shares to UK investors and the Financial Services Authority (FSA) believes that about 800 investors sent money for shares to the two companies.

The order was made as a result of winding up petitions presented to the High Court by the FSA, in which the FSA alleged that Chesteroak and Bingen were dealing in shares or arranging deals in shares without authorisation. Chesteroak and Bingen did not oppose the FSA's petitions.

The order follows on from interim injunctions the FSA obtained against Chesteroak and Bingen in January 2007 stopping them from continuing their involvement in assisting boiler room activities in the UK and freezing their assets and other assets under their control.

Jonathan Phelan, head of retail enforcement at the FSA, said:

"Our action against these firms should serve as a warning to other UK companies and individuals who assist boiler rooms, that the FSA can and will take action to protect consumers.

"Where possible, the FSA will continue to protect investors. However, people should always be cautious when called out of the blue by anyone promoting or offering to sell shares. They should either hang up or at least check that the firm is authorised by the FSA."

Consumers who may have a claim against Chesteroak or Bingen should contact the Public Interest Unit of the Insolvency Service on 020 7637 1110 or by emailing piu.or@insolvency.gsi.gov.uk.

Chesteroak and Bingen were not authorised by the FSA so investors may not claim compensation from the Financial Services Compensation Scheme or make a complaint to the Financial Ombudsman Service.

Consumer warnings on the dangers of boiler rooms can be found on the FSA's consumer website www.moneymadeclear.fsa.gov.uk.

Notes for editors

1. More information on the interim injunctions obtained against Chesteroak and Bingen by the FSA in January 2007 is available from the FSA website.
2. Boiler rooms are not authorised by the FSA. They act illegally by promoting and selling shares in the UK that are overpriced, restricted for onward sale and have little or no realisable value. The boiler rooms then often vanish, leaving the investor out of pocket. Boiler rooms are mainly based outside the UK and therefore the FSA is usually unable to take direct action to shut them down.
3. The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; promoting public understanding of the financial system; securing the appropriate degree of protection for consumers; and fighting financial crime.
4. The FSA aims to promote efficient, orderly and fair markets, help retail consumers achieve a fair deal and improve its business capability and effectiveness.