Impact on the Securities and Exchange Industry/Market & the Futures Industry/Market
The recent movie Boiler Room focuses on the phenomenon known as Boiler Rooms, also known as bucket shops or chop shops. Boiler Rooms are generally fraudulent schemes operated by high-pressure salespersons working out of “front” or boiler rooms equipped with many telephones, offering phony investment opportunities. In the film, Giovanni Ribisi’s character plays one of these salespersons, one who lies and cajoles until somebody gets hurt. As one economic analyst said of the film “Boiler rooms are not very reputable trading firms that push the stocks of companies with a less than $300 million market cap, or micro caps. When it comes to the underbelly of the stock market, first-time director Ben Younger nails it” (Humer 1).
Long considered the underbelly of the stock market, Boiler Rooms more often have a deleterious impact on the securities and exchange and futures markets. The Securities and Exchange Commission (SEC) despises boiler rooms because their existence causes many consumers to complain to the SEC. Further, millions, and perhaps billions, of dollars have been lost by unwary consumers through boiler room futures investment schemes. In general, they create a black eye on the securities and exchange and futures markets, making consumer wary and hostile toward investment and causing more regulation and supervision of the industries by the federal government. This analysis will explore the boiler room phenomenon with a particular focus on how its advent impacts the securities and exchange and futures markets and industries.
The term boiler room is slang for a brokerage firm, bottom line. However, it is a dubious brokerage firm that employs salesman who use high-pressure methods and typically deceit in order to dupe consumers into the purchase of essentially worthless securities. There is nothing new about unscrupulous ...