A boiler room is a scheme in which sellers use high-pressure selling tactics to persuade investors to buy securities, including speculative and fraudulent securities.
Most boiler house sellers contact potential investors through cold calls.
Some well-known boiler house tricks include statements that the investor cannot easily verify, demanding immediate payment or threatening in case of non-compliance.
These methods, if not illegal, clearly violate the good practice rules of the National Association of Securities Dealers (NASD).
Boiler room sales tactics are also restricted by Securities and Exchange Commission Rule 10b5, which prohibits dealers from making false statements, omissions of material facts, or other deceptive acts.