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Boiler Rooms

Boiler Rooms

Boiler room operations are another illegal type of investment advisor misconduct and rank among the worst type of conduct present today. The hallmarks of a boiler room operation are the use of high pressure sales tactics and cold calls to sell stocks sold on Pink Sheets or an over-the-counter bulletin board. The boiler room operation is akin to a telemarketing scam and the people making the calls are telemarketers, not investment professionals. Their goal is to sell as much worthless stock as possible at extraordinarily high commissions. Often, these types of operations use impressive sounding names and office addresses and sometimes overseas offices. The reality, however, is that these operations are typically run out of low rent buildings using banks of phones and telemarketers.

Boiler room operations will frequently promise extraordinary results and tell the person answering the phone that he or she has to purchase the stock right then and there. When the investment collapses, which it inevitably will, they may bully the investor into doing nothing or buying more stock.

Beware of unsolicited calls and high pressure sales tactics.

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