stockbrokers looking to swindle unsuspecting investors. However, boiler rooms may exist on the seamier side of Wall Street but they turn huge profits for those that are able to successfully orchestrate them and avoid prosecution. Further, the existence of boiler rooms is a phenomenon that appears to be gaining popularity in today’s booming securities and futures markets. High-pressure tactics used on investors is the reason for the term boiler room “Typically they are large rooms where high-pressure salespeople on banks of phones call potential investors to sell speculative or even fraudulent stocks, limited partnerships, currency swaps and other schemes offering dazzling returns that never materialize. They’re called ‘boiler rooms’ because of their high-pressure nature” (Berzof 1).
The lure of low risk and high gains makes unsuspecting investors more willing to fall for boiler room securities and futures frauds. What makes boiler rooms illegal consists of a variety of things from misrepresentation and fraud to failure to disclose, stock manipulation, unauthorized trades and a host of other factors such as promising future returns. The majority of boiler rooms are located in the New York, New Jersey, Florida, and California areas. While hard numbers are difficult to come by, industry experts estimate there are basically hundreds of boiler rooms or chop shops in existence around the country. Most salesman employed in the boiler rooms don’t care about anything other than a per-sale commission and aren’t above lying to get it. Others purposefully sell phony or fraudulent stocks and futures. Boiler rooms have a deleterious effect on the securities and futures industries and markets because they make potential investors even more wary of being duped and each year the SEC is inundated from calls from consumers complaining they have been the victim of one of these chop shops. The legitimate investment brokers work...