Beware Of The “Boiler Room”

Posted by admin on July 9, 2009 in stock market | Short Link

Of all the things an investor should be worried about, financial crime should be high on the list. To quote an old financial saying, “The return of your money is more important than the return on your money.”

Something that puts this return at real risk is falling victim to a boiler room operation. In this video the BBC explains how such an operation works. It is essentially a very organised crime operation designed to separate the legendary “fool and his money“.

This story, also on the BBC shows just how lucrative such schemes can be. The six defendants were being charged in connection with a US$61 million fraud.

61 million!!

That is a lot of investor money.

Another example of the scale and deviousness of the crime relates to the book by Jordan Belfort called The Wolf of Wall Street. Belfort ran such an operation himself and made tens of millions of dollars personally and much more for his colleagues. Luckily, his story ended with a prison sentence..

I would suggest that every investor, no matter how experienced, from stock market beginner to professional trader, should reacquaint themselves with such an operation to try and protect against falling victim to such a crime.

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