Boiler room stock scams on the rise


The International Organization of Securities Commissions said on Thursday that boiler rooms that use high-pressure sales strategies to push junk stocks on unsuspecting consumers are a serious global problem.

Like many other scams, many boiler room operations are small-scale fly by night cold calling rooms that can be set up anywhere in the world and then moved around in a flash.

While regulators fight an uphill battle to take on these crooks -- who generally promote thinly-traded penny stocks with false claims and baseless predictions -- it's fairly easy for investors to protect themselves. Repeat after me: I will never, ever, ever make any investment decision based on a phone call from a stranger or an email from someone I don't know.

No one is going to call you out of the blue to offer you a stock tip that can make you rich -- If it's such a great tip, why do they need your money? Why don't they just keep the shares for themselves?

For a great cinematic representation of fraudulent stock promotions through cold calling, check out Boiler Room.