This scam is new to the UK, it's immoral but amazingly not illegal.
Many years ago, I was given shares in Australian insurer AMP as part of a complex pensions policy demutualisation deal. I should probably have sold on day one – AMP has had some rocky times over the past decade.
But they cost me nothing and a useful dividend hits my bank account every six months. I don't monitor the shares that often and I'm not weeping over lost opportunities. I assumed my holding was worth about £4,000.
Last week, a very official looking letter addressed to me by my full name popped through the letterbox. Headed “Offer to buy your AMP Limited Shares”, it asked me to sign an “acceptance form” offering me A$(Australian dollars)2,584 for my entire holding at A$2.01 a share. That's £1,616 in total before currency conversion charges - a lot less than I thought.
So what had hit AMP? What could have caused the sudden near two thirds slump in the share price? It's a huge insurance company in the southern hemisphere and if it had been in trouble, it would have been noted worldwide.
The answer is that nothing whatsover has happened to AMP. Like all companies, its shares go up and down but they have never been as low as the A$2.01 a share on offer.
The letter came from Australian-registered company Share Sales, using a maildrop just off The Strand in London and I was the target of a scam that is immoral but amazingly not illegal.
But while Shares Sales and this scam are new to the UK, they are well known in Australia.
The small print
We are free to sell things for whatever price we want. People often sell cars and properties for less than the market value to get rid of them quickly. There are even reports – mostly urban myths, of folk flogging jewellery for next to nothing because they believe it carries a curse.
So Share Sales is also legally free to offer what it likes – it even warns recipients in the small print to seek advice and it indicates the real current value of the shares low down in the letter. It simply hopes enough people getting the letter will be daft enough to accept.
The Australians call this scam “bottom-feeding”.
Targeting the elderly
Share Sales is owned and run by Suzanne Lee Forster. It is one of several such operations associated with her.
In May 2007, the Australian Securities and Investments Commission ( the equivalent of the FSA) issued a warning notice to shareholders in Bendigo Bank, a retail or “community” bank in Australia. Suzanne offered A$10 a share through her Share Buyback Group when the market price was A$16. ASIC said Bendigo had a high proportion of elderly shareholders with “less market experience” and a large number of small shareholders. It advised investors to junk the offer.
Melbourne based Lee Forster was also behind Hassle Free Share Sales which offered under half price for shares in Henderson, a British fund management group with many shareholders in Australia. Lee Forster is currently working with Patrick Dromi, a former nightclub boss, who moved from providing small hours entertainment to pitching small prices at unsuspecting shareholders. Aged 52, Dromi was behind Share Buying Group, another bottom-feeder. Dromi has a sideline in running bus trips to the Inflation Night Club and the Chasers Club, both in Melbourne's notorious red light district.
No story on bottom-feeding is complete without a mention of David Tweed (born David Tschernitz and once known as David Texas) of Direct Share Purchasing Corporation. He's been at it for longer, and apparently taught Suzanne and Patrick the tricks of the trade. Australian sources say he has netted A$17m (about £11m) over the years with lowball offers to unsuspecting shareholders. But there is nothing illegal in what he does.
It's easy to get shareholder details – you can buy the share register (or even copy it for free if you have enough time). The Australians are about to tighten up on these lists – but there is no sign of anything happening here. So expect Melbourne's bottom-feeders to come calling on small UK shareholders anytime soon.
The FSA says it is now looking at Share Sales and will consider issuing a warning to investors.
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