Investing Defined > Boiler Rooms

Boiler Room

Dishonest brokers set up "boiler rooms" where a small army of high-pressure salespeople use banks of telephones to make cold calls to as many potential investors as possible. These strangers hound investors to buy "house stocks"—stocks that the firm buys or sells as a market maker or has in its inventory.

Boiler room operators typically sell thinly traded stocks of "microcap" companies. To learn more about microcap stock, you should read Microcap Stock: A Guide for Investors. To recognize the tactics employed by boiler room operators, read our brochure on Cold Calling.

http://www.sec.gov/answers/boiler.htm