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FSA/PN/112/2007
2 November 2007

The Financial Services Authority (FSA), assisted by four police forces, on Wednesday 31 October 2007 arrested two men in connection with an investigation into "Universal Management Services" (UMS) which it believes has been helping illegal overseas boiler rooms.

The arrests are part of the FSA's first criminal investigation into boiler room activities.

On Wednesday, FSA investigators, City of London police and local police forces searched several addresses in North Yorkshire, Hampshire and County Durham and arrested the two men. The search and arrest warrants were obtained by the FSA, using its power to prosecute offences under the Financial Services and Markets Act 2000.

The FSA's investigation into suspected criminal offences by UMS followed complaints of cold calling and high pressure selling from consumers, told by known boiler rooms to make cheques payable to UMS. The FSA discovered that in a 12 month period UMS, together with related organisations GS Asset Management and Continental Administrative Services, sent more than £5 million of investors' money overseas. The FSA has also obtained orders freezing assets of up to £5,450,000 relating to this investigation.

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

"The is the first time we have taken this action and it shows that we will not hesitate to use our powers to protect consumers, including launching criminal investigations where appropriate. However, investors should always be cautious when they are cold called by any firm promoting or offering to sell shares and should first check to ensure that the firm is authorised by the FSA."

If you are a customer of UMS, please contact the FSA's consumer contact centre on 0300 500 5000 with your details. The FSA will keep UMS customers updated as the investigation progresses. UMS was not an authorised firm so investors do not have access to the Financial Services Compensation Scheme (FSCS) or the Financial Ombudsman Service (FOS).

No one has been charged at this stage in connection with the FSA's investigation which is ongoing. Criminal investigations are one of many tools that the FSA employs to tackle illegal boiler rooms that target UK investors.

Notes for editors

1. Known boiler rooms for which UMS and related organisations were processing payments were:
   
   Trinity Finance International;
   Stanmore Advisory Group;
   Berkley Wyatt;
   Klein Group;
   GS Equity Group;
   Enterprise Analytics Inc

2. Boiler rooms are not authorised by the FSA and 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. Consumers can download a leaflet on boiler rooms, check whether a firm is authorised by the FSA, or if the firm calling is on the list of 'known unauthorised firms'. Consumers that have been targeted by a boiler room can report information via a form on the FSA website or by calling the FSA consumer contact centre on 0300 500 5000. For further information on boiler rooms visit our consumer website.

4. "Universal Management Services" is not a registered UK company and is unconnected with the following UK registered companies:
   
   Universal Management Services Limited, trading as 'Behr and Butchoff' (Company number 01513268);
   Universal Management Services (UK) Limited (Company number 05438733);
   Universal Management (UK) Limited (Company number 06127521); and
   Universal Management Limited (Company number: 04809460).

5. 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.

6. The FSA aims to promote efficient, orderly and fair markets, help retail consumers achieve a fair deal and improve its business capability and effectiveness.