The Texas Securities Board investigates and takes action against firms and brokers who use high-pressure tactics to sell securities. In a recent case, “boiler rooms” were described this way:
The firm was operating a classic boiler room. The brokers sat “cheek by jowl” in a room the size of a basketball court. All the desks were lined up side by side. The firm held mandatory sales meetings each morning at 8:30 a.m. and reviewed sales techniques. Scripts for the firm’s “house stock” were distributed. Brokers were expected to follow the scripts and only give customers the information they contained. After the morning meeting, brokers were expected to spend the entire day on the telephone. The firm expected a high volume of sales, and brokers who did not stay on the phone were fired.
Honest brokers use cold calling to find clients for the long term. They ask questions to understand your financial situation and investment goals before recommending that you buy anything. Dishonest brokers use cold calls to find “quick hits.” Potential signs of trouble:
It happens to all of us. The telephone rings as you’re sitting down to dinner, relaxing with family, or putting the kids to bed. A stranger is selling something.
. . . is there help or trouble on the line?It’s known as “cold calling.” For securities firms, cold calling serves as a legitimate way to reach potential customers. But sometimes serious trouble and financial losses await you at the other end of the line. Dishonest brokers may pressure you to buy a bad investment. Or it may even be a scam!
Whether the calls are annoying, abusive, or downright crooked, you can stop cold callers. The law protects you by requiring several rules.
This brochure tells you about your legal rights, how to deal with cold calls, how to stop them, and how to evaluate any investment opportunity that comes your way over the telephone.
When people from the securities industry call to sell you something they must:
Call Only Between 8:00 a.m. and 9:00 p.m.
Cold Callers must tell you:
Every securities firm must keep a “do not call” list. If you want to stop sales calls from the firm, tell the caller to put your name on this list.
Cold caller my not threaten, intimidate, or use obscene or profane language.
If you decide to buy from a cold caller, do not give your banking information over the phone. Brokers must get your written permission before they can take money from your bank account.
Brokers who lie to you about any important aspect of an investment opportunity violate federal and state securities laws.
When cold callers use harassing, abusive sales tactics and lie to you about investment opportunities, they violate the cold calling rules and break federal and state securities laws. Don’t let them off the hook! To complain about abusive cold callers, write down the name of the caller, the name of the firm, the date and time of the call or calls, what the caller said to you, and what you said to the caller. Send your complaint to the Texas State Securities Board.
Call the Texas State Securities Board and ask:
Printed August 2007
The text of this publication was derived from a pamphlet created by the North American Securities Administrators Association and the U.S. Securities and Exchange Commission.
