boiler room

Boiler Room

Investopedia Commentary

A broker using boiler-room tactics gives customers only positive information about the stock and discourages them from doing any outside research. Boiler-room salespeople typically use catchphrases like "it's a sure thing&quot or "opportunities like this happen once in a lifetime".

Boiler-room methods, if not illegal, clearly violate the National Association of Securities Dealers' (NASD) rules of fair practice. The North American Securities Administrators Association estimates that investors lose $10 billion a year - roughly $1 million an hour - to investment fraud promoted over the telephone.

Related Links

Investment Scams Tutorial
Understanding Dishonest Broker Tactics

See also: Broker, Bucketing, Churning, Circular Trading, Cold Calling, Dialing and Smiling, Front Running, National Association of Securities Dealers - NASD, Penny Stock, Pump and Dump

boiler room

An area in a sales operation in which are located personnel who are engaged in contacting prospective buyers, usually by telephone, and in using high-pressure tactics to sell securities. These operations are associated with high commissions and unethical practices.