Read this article a few days ago.
Okay, other than the fact that it sounds as though these guys are pressured to rip of clients, I have to ask: what is a boiler room? I honestly don’t understand the reference.
also, has anyone had experience with this company?
A boiler makes steam at high pressure. The [expletive]'s at these firms use high pressure tactics to con people out of their money.
It’s just a macho metaphor that lends a phony Nietzchean–social darwinist veneer that some insecure people like to use to cover up sleazy cowardly practices.
A boiler room is a fake share dealing service that sells junk stock to mugs.
It’s called a “boiler room” as it’s descriptive of the sort of place they operate from - ie a really crappy part of a building with a swish address. The punter only sees the Wall St address and doesn’t know that the con-men are in a tiny serviced office in the basement.
See also the 2000 film Boiler Room. It’s from back when Vin Diesel was a good actor.
A boiler room is a company that deals in stocks. They cold call potential customers and push stock recommendations. The stocks they push are usually marginal companies or penny stocks. The brokers get a higher commision for this type of security and they push it heavily.
Often it is part of a “pump and dump” scheme. A stock which is thinly traded is heavily pushed. Many people buy it pushing up the price. This makes the purchaser happy for a time as his initial investment has grown. Other shareholders take this opportunity to dump the stock (often insiders working with the boiler room) sending the stock spiralling down before the customers can sell.
The term is also applied to more legitimate brokerages that are not doing anything illegal. I have an acquaintance who worked for one of those firms. They use high pressure cold calling to entice purchases of stock. They did not have a pump and dump arrangement, but they took comissions for their sales.
The movie Boiler Room was actually a pretty accurate depection of the industry and a good movie to boot.
I was about to say that. You should watch the film. IIRC, the director used to work in a boiler room himself, so check out the DVD commentary.
Yeah, I actually read that the director worked at Ameriquest himself, and based the movie off of his experiences there.
Sounds like a pretty intense place to be. I understand the need to produce results, especially in a financially driven environment, but I sure don’t see myself doing business with them.
FYI, companies/brokerages of this type are also known as “chop shops”.