Legal Thriller Author Asks: Legal Stock Tips or Con Man Boiler Room?--Are You a Victim?

Like a high-gloss diamond ring on the hand of a glamorous fashion model, the offices of a legitimate stock brokerage will sparkle. When you visit one you will not feel like you are going up against a card shark in a gambling casino. You will quickly conclude that these are not the premises of a scam artist's carnival midway joy ride.

They will showcase a good balance of offerings. Many of these will be with Fortune 500 companies and a good cross-section of well-known, prestigious firms listed on the various stock exchanges. And no quick-buck con men to instantly push these either.

They are usually located at easy-to-find addresses on well-known streets, and are housed in well-lighted, nicely-appointed offices. Very subtly you will get the idea that, while money can't buy happiness, it sure makes misery a lot easier to deal with.

Extensive biographies of their brokers and other operational and management personnel are most often readily available. Some you will meet, with no hint or talk of up the ante, beat the street, sweeten the pot, a sweetheart deal, or it's a cash cow.

And, their list of references and testimonials from satisfied customers is usually extensive. No chest thumping, self-congratulatory back slapping of themselves as being the "best in the financial guru business."

In checking out their research facilities you will also find an attempt at thoroughness, a striving to provide fact-digging excellence to support their stock and bond selection recommendations.

In sharp contrast. . .

Much like the face on the bar room floor, a boiler room--or bucket shop--will almost always be located on a back street, in a dingy office. It will have many small desks shoved together, or in tiny cubicles, featuring sales personnel--scam artists-- working phone banks, reading from scripts in their conversations. They do not provide wide-spread offerings. And, no research facilities open to the public at this version of a Norman Bates motel either. No extensive bios and no variety of testimonials. Their surroundings are much like the settings in a legal thriller movie.

Do not expect to deal with someone inspired by Mother Teresa. Rather, the boiler room boys will glad-handingly pass themselves off to you as the most gifted authorities on the American free enterprise system since the Rockefeller clan's bankers. Their specialty, along with their operational goals, is quite different from the legitimate stock brokerage. Learning these differences is essential to your financial well being. Failure to do so could be the equivalent of diving into a lake encased in a cement life jacket. The con men's "specialties" includes:

> Classic Pump and Dump operations.
Just another well-known shell game.

> Reverse of the Pump and Dump, known as the Short and Distort. Here the scam artists spread rumors in order to drive the prices of thinly traded stocks down. rather than in the generally accepted direction, up. Then, they buy back the results of their "short sales" at a discount and profit. Most often considerably.

> The selling of fictitious foreign exchange investments. Yes, that's right, stuff grabbed purely out of thin air. The scam artists know how intriguing it is to seduce with language like "foreign exchange," and how many suckers exist out there who will "sail" for this exotic-sounding type investment.

> The selling of risky, small cap IPO's (Initial Public Offerings). Now, not all IPOs are necessarily poor investments. Some--a very few--are actually millionaire makers. But, the odds against are enormous. The only good, proven millionaire-making potential here is for the scam artists who peddle them. The odds do truly smile on the con men in this investment category.

> The selling of "house stocks," shares in shaky companies--usually tiny firms--that are of OTC Bulletin Board or Pink Sheets quality at best.. These are usually blocks of stock that the scam artists have purchased at a sharp discount. Exceptions? Yes, like IPOs. A select few will flower, flourish, and produce bountiful profits. But, the big majority will reward--only--the con man advocate.

> Maybe the worst of all the practices of these people is the holding back on execution of sell orders. And, sometimes outright failure to execute. (They will go to great lengths to avoid the creation of downward pressure on the prices of stocks they are trying to unload.)

Selection can be of equal challenge--in determining reality as opposed to the plot of a legal thriller book. Your failure at being able to distinguish between the two--differentiate between the legitimate and illegitimate operations--could be costly to you. If you were to, somehow, stumble into dealings with the boiler room boys by mistake, you would be like the lumberjack 100 feet up a tree suddenly coming upon a bee hive. Naturally, you can stomp, cajole, complain. You can threaten them with a law suit.. Of course, you can always try taking a bone away from a pit bull, too. You'd probably get equally as far.