What is a boiler room operation?
In the context of investing, the term “boiler room operation” refers to the use of high pressure sales tactics to sell stocks to clients who are “cold called”, or called randomly, most likely after being picked out of a phone directory. Boiler rooms are often set up in inexpensive office spaces, where armies of telemarketers make these cold calls. While the stock they sell may be real (most likely an unknown micro-cap stock), the information these salespeople use to hype their product could be false or misleading because of their overwhelming desire to sell the stock and claim commissions. They’ll often tout stocks that trade on the Pink Sheets or the over-the-counter bulletin board, as both of those exchanges require little in terms of disclosure and regulation. Besides the fact that these operations are based on deception and coercion, many of these salespeople and brokers are not even qualified to work in the securities industry. And they will go to great lengths to try to swindle y
