Financial beach bar

A financial beach bar is a company that provides investment services illegally. That is, they are companies that are not registered or supervised by any authority (SEK, FCA or CNMV for example) nor are they regulated by legislation.

These types of companies do not meet the minimum requirements (transparency, capital , etc.) nor do they offer minimum guarantees to investors. Thus, scam situations are usually common in financial bars.

How do financial bars work?

The financial beach bars usually have some guidelines of action that are common to all of them:

  • Customer acquisition is electronically, letter or email. The most common is through telephone calls, using persuasion techniques that border on harassment. In no case there is a customer acquisition personally.
  • They tend to offer much higher returnsthan market, which are those obtained with companies that provide legal investment services.
  • These high returns are not justified with any objective report or data; They are only based on promises and predictions of the person representing the financial beach bar, with a clear intention of deceit.
  • Once the money from the investor has been collected, the financial beach bar disappears (change of location, denomination, etc.). That is, the average life of this type of business is short term.

How to avoid a financial beach bar?

At the time of making an investment, it is essential that a series of preventive measures be taken, to avoid falling into the financial beach bars. First, it must be confirmed that the investment company meets all legal requirements; To do this, you must ask them to identify themselves correctly, before carrying out the negotiating process. In addition, you have to suspect newly created companies, as it may be an existing financial beach bar that has been reconstituted.

In addition to the above, it is advisable to distrust at the moment that someone offers us a much higher profitability than what the market offers. Before accepting it, you have to make sure that the investment company is not a financial beach bar, trying to get away from all the persuasion techniques they carry out.

How to act if I suffer a financial beach bar?

The first thing to do if we fall into the deception of a financial beach bar is to report to the competent authorities, trying to provide all possible documentation. It is also very important not to contribute money to that investment again.

The following example is very common: there is a first capital investment that gives us zero returns. Then, the financial beach bar gets back in touch with us to reinvest for the second time promising that we will recover the investment and obtain an additional return. At that time is when you have to report to the authorities, if it has not been done before.

by Abdullah Sam
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