The brokers said they start by recommending a well-known stock. A few months later, they pressure investors to sell and switch into other shares, charging commissions of about 3 percent on each trade, or to buy private deals which generate bigger fees, the brokers said.
“You would never see a larger firm do that,” said Brown, the Ritholtz CEO.
One 18-year veteran said his clients always lose eventually, forcing him to start cold-calling again.
The lines the chop shops use haven’t been updated since many of them were featured in the 2000 film “Boiler Room,” brokers said. One script, obtained from a former broker at Meyers Associates LP, recommends telling a man who says he has to ask his wife before trading to buy a fur coat with the profits instead.
“Let’s not kid each other, I didn’t just pick up the phone book and dial your number,” the script reads. “Opportunities like this do not come along every day.”
Bruce Meyers, CEO of the brokerage, didn’t respond to messages seeking comment.
Erectile Dysfunction
Representatives of Meyers, Carris and Aegis are among those who mingle with executives and investors at free lunches organized by a club called the Harvard Investors Group. Brokers giggled and retirees picked at chicken as an executive from San Diego-based Apricus Biosciences Inc. talked up an erectile- dysfunction cream at a meeting in November at the 155-year-old Down Town Association on Pine Street. Dan Killian, the group’s organizer, said the stock sounded like it had potential.
“Hello, ladies and gentlemen, sometimes there are opportunities,” Killian told the gathering of about 40.
Killian said his group isn’t connected with Harvard University and doesn’t pretend to be. David Pitts, an Apricus spokesman, said the company regularly speaks with institutional investors. Michael Ference, a lawyer for Aegis, said only three of the firm’s brokers at 40 Wall St. engage in what he called prospecting. Carris founder George Carris, who’s fighting Financial Industry Regulatory Authority allegations that he used the brokerage’s money to cover $590,000 of personal expenses, including $10,554 at a tattoo parlor, didn’t reply to messages.