Unsolicited persuasive calls, the promise of a quick killing on the stock market, glossy brochures and time pressure - these are the ingredients that lead some people to part with their money and others to contact the authorities.

The Central Bank has noticed an upsurge in activity by unauthorised foreign investment intermediaries targeting the Irish market and last week published its most recent warning. The marketing strategy of the two companies named in the latest warning, Millennium Financial Ltd and Bradford-Kempner Investments, begins with cold calling and is typical of this kind of operation. In the latest instances, they give contact details in Uruguay, the Philippines, the Netherlands and Canada but, according to the Central Bank, location is unimportant. A bank spokesman said such firms were very mobile and all they needed to operate was a laptop and a telephone. "We have come across the same people working out of Europe, Asia and South America, usually out of the less well-regulated countries," he said. So who is targeted by these investment companies and where do they get their potential client database from?

According to the Central Bank, share registers seem to be the most common source of call lists. Those who invest in high-risk stocks, such as exploration equities, are more likely to be selected. When Mr Michael Wilson of Bangor, Co Down, was contacted at home by Millennium Financial, he questioned how they had got his number. He was told emphatically that it was not a cold call, but that they were responding to a query about investment information that he may have made on the Internet or by mail. It is illegal to sell financial products by direct, unsolicited telephone contact. The Central Bank accepts that some of these foreign investment companies could be perfectly legitimate but they are not licensed in this State as they must be to operate legally. The Bank says that, at the least, they should stop when told they are operating illegally. If everything is above board, they could apply for authorisation. The bank has placed 26 warning notices in the national newspapers concerning 55 unauthorised firms since August 1998, when new powers contained in the Investment Intermediaries Act 1995 came into effect. Potential investors have no protection if they invest through unauthorised firms. If the company goes broke or disappears with the investor's funds, there is no access to compensation through the Investor Compensation Company, which can pay out up to £15,571 (€19,771) per investment for losses incurred through problems with licensed intermediaries. Millennium Financial and Bradford-Kempner first came to the notice of the Central Bank through complaints from the public earlier this year. Millennium Financial had contacted numerous Irish residents and followed up the calls with glossy brochures detailing attractive investment offers.

The Bank first wrote to the firm back in March and told it that its activities were illegal. When it did not stop selling its services here, the Bank wrote to the Central Bank of Uruguay seeking information about the company. It is difficult for the Central Bank of Ireland to pursue such cases in countries where their contacts are limited. Their only recourse is to warn the public so that people who are contacted will know it is unsafe to invest. Fraudulent companies use various tricks to draw in gullible investors. Their stock tips may relate to real companies with good prospects and cases have been known where the fraudsters set up a company with the same name as a successful company in an obscure jurisdiction so that they can issue genuine-looking share certificates.

Some Irish investors have been caught out twice over by being told that a large bidder is buying up the (worthless) shares that they hold at a high price. All they need to do is send a cheque for a few thousand pounds to cover some expense entailed in the deal and the profit will be theirs.

Many of the firms operate under several different names from the same location. They tend to use reputable-sounding names and sometimes incorporate a name from a well-known institution into their own. The advice from the Central Bank to members of the public contacted out of the blue by a foreign company selling investment services is to get the company's details, end the call and call the Bank to report the matter on 1890 200 469.