Wall Street Attracts Chop Shops 20 Years After ‘Wolf’
February 3rd, 2014Via: Bloomberg:
When Paul Taboada ran Charles Morgan Securities Inc. at 120 Wall St., he set himself apart by wearing suits with the brokerage’s name stitched into the pinstripes.
He ran into trouble within a few years. A client was sent to jail in 2010 for a fraud prosecutors alleged Taboada facilitated. Customers complained about a fund he set up to invest in Facebook Inc. (FB) before it went public. That didn’t slow him down. He shut the firm amid an investigation by regulators and moved to Blackwall Capital Markets Inc. at 100 Wall St., where trainees call hundreds of strangers a day to pitch stocks.
“What Wall Street does is it affords the common man participation in deals the institutions are doing,” said Taboada, 49, who hasn’t been sanctioned in either matter.
Twenty years after Jordan Belfort and his Stratton Oakmont Inc. defrauded investors out of more than $200 million from its offices on Long Island — a story retold in the movie “The Wolf of Wall Street” — New York’s financial district has become a hub for veterans of defunct boiler rooms who use decades-old scripts to pressure investors into speculative trades, more than 40 current and former brokers said in interviews.
“They’re preying on the few people who still answer a landline phone,” said Joshua Brown, chief executive officer of Ritholtz Wealth Management in New York, whose 2012 book “Backstage Wall Street” described the sales tactics. “You pitch 50 guys a stock, and you pitch 50 guys another. If one goes higher, you go back to that pile.”
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