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The investors were illegally sold shares by unauthorised, overseas investment firms also known as boiler rooms.

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.

The FSA investigated the shares sold by various boiler rooms in two North American based-companies, Rocky Mountain Gold Mining Corporation and Rocky Mountain Gold Mining Inc (Rocky Mountain).

It found that UK investors had sent about £1.25million to North America where Rocky Mountain's operations were based.

The FSA worked with Canadian regulators, the British Columbia Securities Commission (BCSC) as well as the Ontario Securities Commission (OSC), to freeze the funds investors had sent over.

The FSA also helped to ensure plans were put in place to refund the money. The regulator said that investors were very fortunate in this case as usually boiler rooms are structured to prevent such enforcement action.

The funds returned to investors at this stage amount to 90 per cent of the sum invested but it is likely that there will be other future payouts.

Jonathan Phelan, head of department in the FSA's enforcement division, said that this was a rare bit of good news for investors who had been persuaded to hand over money to boiler rooms as usually the money disappears without a trace.

He reminded investors to just hang up the phone when contacted by boiler rooms, as in most cases these investments did not have a happy ending.

"Working in partnership with our Canada counterparts on the case helped to ensure that investors were able to get their money back this time,” Phelan added.

Michael Watson, director of enforcement for the Ontario Securities Commission, said that his staff were able to act quickly to preserve the funds sent by investors with the information initially obtained from the British Columbia Securities Commission and other sources.

After these funds were frozen, the cross-jurisdictional co-operation between the OSC, the BCSC and the FSA was crucial in achieving this result.

Any investors who bought or believed that they bought shares in either Rocky Mountain Gold Mining Corporation or Rocky Mountain Gold Mining Inc and sent money directly to Ontario, Canada may be entitled to a refund.

The FSA has tried to contact all relevant investors for whom it has been able to identify contact details but some investors targeted by the boiler rooms may not be aware that they could be entitled to a refund.

Any investor who has not yet been contacted by the FSA or the Ontario Securities Commission should call the FSA's consumer contact centre on 0845 606 1234.

The sale of shares were not carried out by a UK authorised firm so investors can not complain to the Financial Ombudsman Service (FOS) or claim compensation from the Financial Services Compensation Scheme (FSCS).

Consumers can use the FSA website to 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'.

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Related links

• Financial Services Authority