Calls from the Boiler Room

Of late, I have been getting a lot of calls at work from stock boiler-rooms with high-energy come-on guys trying to sell me some hot equity.  The tactics used by these calls is very consistent, but to describe it I need to share some background.

Fifteen years or so ago, I from time-to-time would get calls from what I assume were legitimate brokers trying to get my business.  They would call me and say something like "I am not going to sell you anything today.  I am going to give you the name of 5 equities, and in 6 months I am going to call you back".  If played straight, this is not a bad sales tactic - prove your ability to pick stocks and out-perform the market in advance of asking for business.  Of course, this could be gamed:  I could create 20 lists of 5 stocks each and call a thousand people, giving each person one of the 20 lists.  Then I could wait 6 months and call back those people whose 5 stocks outperformed the market.

Today, there is a less patient variation on this call.  I get about three calls a week from guys saying "do you remember me when I called you last January 23, and fedexed you our stock selections - since then they are up xx%".  The only problem is that they never called or fedexed anything, but I guess they are hoping that I assume I forgot and then take their word for their stock picks.  The scam here becomes more obvious when you get your 10th call from these guys.  It became even more obvious given I have three numbers for my business and over a 20 minute time period I got three calls on three lines from three different people with the same spiel starting "this is X, you remember my call from a few months ago?"

LOL, I can just picture Tony Soprano in the back room monitoring the whole operation. 

  • http://home.earthlink.net/~sleepyjackal/index.html Gary and the Samoyeds

    The first scenario (winnowing the list to just those who had winners each time) is prosecuted occasionally under federal law. I don't know the exact statute, but it's basically fraud.

    The second one is much harder to prosecute. I don't know if it's ever been done.