The Financial Service Authority (FSA) saw the number of boiler room fraud schemes operating through clones of authorised firms triple in 2011.
Boiler rooms, which are unauthorised businesses, usually contact people by telephone, using high pressure sales tactics to con them into buying non-tradable, overpriced or even non-existent shares.
The FSA said they were able to appear more credible by cloning genuine, authorised firms.
The regulator received 449 reports about cloned firms, up from 161 in 2010, while the overall number of boiler room scam reports was up from 4,527 to 5,401.
However, the number of actual victims who went on to invest in the schemes was down from 831 to 770, on average parting with approximately £20,000 each.
Jonathan Phelan, the FSA's head of unauthorised business, said: "It is encouraging that the number of people who actually parted with their money has dropped.
"This suggests that our warnings about unauthorised firms are getting through and people are better prepared when they are called out of the blue.
"We will continue to fight all forms of unauthorised business but the strongest weapon against scams remains common sense and a little bit of homework: check who you are dealing with and never forget that if it sounds too good to be true - it probably is."
The FSA has produced this video to explain to consumer how to avoid becoming victims of boiler room scams:
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