Police are raiding offices in London after people lost £18 million to 'boiler room' scams
LONDON — City of London police raided 20 offices on Tuesday as part of a crackdown on binary options fraud, after nearly 700 people reported losing more than £18 million in scams during the first six months of 2017.
In a "day of action," conducted in partnership with the Financial Conduct Authority (FCA) and HM Revenue and Customs, the Police occupied offices across London's financial district in order to review companies' compliance documents and gather intelligence on different types of investment fraud.
Glenn Maleary, head of the economic crime directorate at the City of London Police, said in a statement: "With our partners, we want to ensure the City is a hostile environment for fraudsters to operate in and we will continue to do everything we can to ensure that this is the case.
"Throughout this year we have been raising awareness of Binary Options fraud and over the coming days we will be providing more advice on how people can beat the boiler rooms and protect themselves from all types of investment fraud."
Binary options trading is an investment that works like a prediction market. An investor bets that a given asset will be above or below a certain point after a set amount of time, and if correct will recoup their investment with a bonus. If they are wrong, they lose the entire amount.
2,065 people have reported being a victim of a binary options scam since 2012, according to Police figures, losing a total of roughly £59.4 million and £22,811 each on average.
During this week's raid, one team discovered a business that had paid over three month's rent up front, then disappeared. The Police are now working to gather more information about the company, and whether it was a "boiler room" — a hub out of which criminals operate.
Last year, the FCA found that 82% of people who engage in binary options trading lose money, and some have said the practice is more akin to gambling than to investing.
Credit: Business Insider, Camilla Hodgson Oct. 19, 2017, 9:53 AM.