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Beware the fraudulent activities of a share “bucket shop”.

 A Bucket Shop (sometimes called a “boiler room”) is a fraudulent brokerage firm that uses aggressive sales techniques, usually by telephone, to sell stock that the brokerage owns and wants to get rid of. The securities they sell are typically poor investment opportunities, and almost always penny stocks. Even though there may be “evidence” of a paper transaction often there is no real transaction on any stock exchange. The bucket shop will present fraudulent paperwork to show that an investor has lost money on a deal but deducting their fees from the (reduced) proceeds. This despite the fact that even if a trade has been made it has been done in such a way as to ensure any profit stays, illegally, with the brokerage firm.

The term comes from the fact that instructions given by an investor end up “in the bucket” (waste paper basket) and are never actually acted upon. The whole process involves violations of several provisions of US federal securities or commodity futures laws and those or most other stock exchanges worldwide.

They may also make trades on a client’s behalf promising a certain price but actually not doing the deal until a different price arises when they then make the trade, keeping the difference as profit.

However the term also applies to agencies who sell airline tickets (usually but not always on charter flights) at discount prices. So while share-scam bucket shops are to be avoided you can get good deals from airline bucket shops.

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One Response to “Bucket Shop (or Boiler Room)”

  1. Eduardo says:

    Thank you for this information

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