Boiler room

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In investing, the term "boiler room" or "boiler room operation" refers to the use of high pressure sales tactics to sell stocks to clients who are called randomly ("cold called") sometimes simply from out of a phone directory.[1][2]

Boiler rooms are often set up in inexpensive office spaces, where telemarketers make calls from their desks. The stock they sell may be real--usually unknown micro-cap stocks--but the salespeople hype them up with misleading or false information. They are paid on commission, so they generally only make money when they sell a stock. They often push stocks that trade on the Pink Sheets or the over-the-counter bulletin board, which means the stocks are largely unregulated.

Besides the fact that these operations are based on deception and coercion, many of these salespeople are not actually registered to trade securities.[3]

Misc

A movie called "Boiler Room" was released in 2000.[4]

References

  1. Mobbed Up on Wall Street. Bloomberg.
  2. Learning the Tricks of the Boiler Room Trade. FINRA.
  3. What is a boiler room operation?. Investopedia.
  4. Boiler Room. IBD.