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- SEC Fines Constant Contact, Popular Email Marketer, for Overstating Subscriber Numbers
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- SEC Names Valerie Szczepanik Senior Advisor for Digital Assets and Innovation
- SEC Modernizes Delivery of Fund Reports, Seeks Public Feedback on Improving Fund Disclosure
- NYSE Says SEC Plan to Limit Exchange Rebates Would Hurt Investors
- Deutsche Bank faces another challenge with Fed stress test
- Former JPMorgan Broker Files racial discrimination suit against company
- $3.3Mn Winning Bid for Lunch with Warren Buffett
- Julie Erhardt is SEC's New Acting Chief Risk Officer
- Chyhe Becker is SEC's New Acting Chief Economist, Acting Director of Economic and Risk Analysis Division
- Getting a Handle on Virtual Currencies - FINRA
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NEWSLETTERS & ALERTS
Boiler Rooms Are Dangerous – In Movies and In Real Life
[Photo: Boiler Room / NewLine Cinema]
by Howard Haykin
WELCOME TO REALITY. The U.S. Securities and Exchange Commission (the "SEC") charged Benjamin C. of Fairfield, NJ, with orchestrating a New York-based boiler-room operation that bilked individual investors out of millions. He did so by unloading shares of small, lightly-traded penny stock at inflated prices – thanks to help from traders and salespersons at so-called boiler rooms.
According to the SEC, Benjamin C. first acquired (on the cheap) large blocks of shares in Renewable Energy and Power Inc. (“RBNW”) - a company that was 'going nowhere fast'. He then retained a New York boiler room to artificially ‘pump up’ (promote) the market price and the trading volume of those shares. Over the next 5 months, boiler room salespersons aggressively sold RBNW shares to elderly and unsophisticated investors.
By unloading his shares at artificially high prices, Benjamin C. earned $3.1 million in illicit profits, while unsuspecting investors lost more than $2.4 million.