The Financial Services Authority is to boost its ability to combat ‘boiler room’ scams by recruiting 20 additional investigators to its enforcement division, the Gazette has learned.

The extra staff will supplement the planned recruitment of 40 investigators by the FSA’s director of enforcement, ­Margaret Cole, as the division deals with an increasing workload. The FSA has already said that it will recruit 280 more staff this year, including solicitors from City firms as well as forensic accountants and other professionals.

In an interview with the Gazette, Cole, previously head of dispute resolution at the London office of US firm White & Case, said that more scams, such as boiler room frauds, are ‘coming out of the woodwork’. Boiler rooms are unauthorised enterprises that persuade investors to purchase worthless shares.

Cole also said the FSA will pursue costs and confiscation orders against solicitor Christopher McQuoid, former general counsel at TTP Communications, and his father-in-law, James Melbourne, who were jailed last week at the culmination of the authority’s first criminal prosecution for insider dealing.

She said the previous absence of insider-dealing prosecutions was due to the convention of using civil proceedings before she took office in 2005. ‘The assumption was that, with civil proceedings, insider dealing is easier to prove and proceedings are more straightforward because of the lower burden of proof,’ she said.

‘But we were not finding that the [Financial Services and Markets Tribunal] required a lower burden of proof. Most importantly, we thought we needed to get tougher on the market, and we would do this by starting criminal proceedings. The idea was to make people more scared of us.’

McQuoid, 40, and Melbourne, 74, were found guilty of one count of insider dealing at Southwark Crown Court. Both men were sentenced to eight months in prison, with Melbourne’s sentence suspended for 12 months.