BUCKET SHOP
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'Bucket shop' has two basic meanings:
1. A pejorative colloquial phrase which refers to different kinds of businesses, indicating that the speaker believes it is a fraud or scam.
2. A brokerage enterprise that “books" (i.e., takes the opposite side of) retail customer orders without actually having them executed on an exchange.[1]
""Bucket Shop"" is a specifically defined term under the criminal law of many states in the United States which make it a crime to operate a bucket shop. [2] Typically the criminal law definition refers to an operation in which the customer is sold what is supposed to be a derivative interest in a security or commodity future, but there is no transaction made on any exchange. The transaction goes 'in the bucket' and is never executed. Without an actual underlying transaction, the customer is betting against the bucket shop operator, not participating in the market. Operating a bucket shop would also likely involve violations of several provisions of US federal securities or commodity futures laws[3].
Bucket shops specializing in stocks and commodity futures flourished in the United States in the late 1800s and early 1900s.[4].
In the United States, the traditional pseudo-brokerage bucket shops came under increasing legal assault in the early 1900s, and were effectively eliminated in the 1920s. However, the term came to apply to other types of scams, some of which are still practiced. They were typically small store front operations that catered to the small investor, where speculators could bet on price fluctuations during market hours. However, no actual shares were bought or sold: all trading was between the bucket shop and its clients. The bucket shop made its profit from commissions, and also profited when share prices fell.
The terms of trade were different for each bucket shop, but bucket shops typically catered to customers who traded on thin margins, even as low as 1%. Most bucket shops refused to make margin calls, so that if the stock price fell even momentarily to the limit of the client's margin, the client would lose his entire investment
The highly leveraged use of margins theoretically gave the speculators equally large upside potential. However, if a bucket shop held a large position on a stock, it might sell the stock on the real stock exchange, causing the price on the ticker tape to momentarily move down enough to wipe out its clients margins, and the bucket shop could take 100% of their investments.[5]
There are two reported origins of the term ''bucket shop''. First, that it was applied to low-class London drinking establishments that sold the dregs of other saloons - by the bucket. Second, it described London grain dealers who dealt in smaller grain contracts than did the Board of Trade. In either case, ''bucket shop'' came to apply to low-class pseudo stock brokerages that did not execute trades.[6]
The term bucket shop is now applied to any fraudulent stock-selling operation such as a boiler room, which has an undisclosed relationship with the company being promoted or undisclosed profit from the sale of house stock being promoted. A bucket shop promotes (via telephone or email) thinly traded or even fraudulent investments.
An "heraldic bucket shop" is a heraldry company that will sell a coat of arms associated with the customer's surname. Sometime a company will create a coat of arms for a surname that never had a coat of arms. These coats of arms are almost always those of someone long-dead and of no relation to the customer. Most bucket shops maintain computerized data-bases, or buckets, compiled from old manuscripts, armories, or ordinaries. In most European traditions, a coat of arms must be inherited. Just because someone named "Smith" possessed a coat of arms does not mean that everyone named "Smith" has a right to use that armorial achievement.
Some sellers of discounted airline tickets are referred to as 'bucket shops' [8]
★ Forex scam
★ (Heraldry Scam)
1. http://www.cftc.gov/opa/glossary/opaglossary_b.htm Glossary, US Commodity Futures Trading Commission website.
2. For example, see California's definition, Washington State's definition, Pennsylvania's definition, or Mississippi's definition.
3. http://caselaw.lp.findlaw.com/cgi-bin/getcase.pl?court=4th&navby=docket&no=001488p See, for example, CFTC v. Baragosh (currency futures bucket shop)
4. http://www.historycooperative.org/cgi-bin/justtop.cgi?act=justtop&url=http://www.historycooperative.org/journals/jah/93.2/hochfelder.html
5. Edwin Lefevre (1923) ''Reminiscences of a Stock Operator'', reprinted 1968, New York: Simon & Schuster. (although a novel, the book is regarded as a ''roman a clef'' of the life of actual stock operator Jesse Livermore).
6. Ann Fabian (1999) ''Card Sharps and Bucket Shops'', New York: Routledge, p.189.
7. Hill, John Jr., ''Gold Bricks of Speculation'', (Chicago, Il.,: Lincoln Book Concern, 1904) p.39. Quoted in Markham, Jerry ''The History of Commodity Futures Trading and its Regulation'', (New York, Praeger, 1987) Chapt. 1 n.13.
8. Airline Ticket Consolidators and Bucket Shops FAQ
The following are websites purporting to sell the coats of arms of various surnames, though in most heraldic traditions, no such thing exists.
★ Coat of Arms Store
★ All Names Heraldry & Coat of Arms
1. A pejorative colloquial phrase which refers to different kinds of businesses, indicating that the speaker believes it is a fraud or scam.
2. A brokerage enterprise that “books" (i.e., takes the opposite side of) retail customer orders without actually having them executed on an exchange.[1]
""Bucket Shop"" is a specifically defined term under the criminal law of many states in the United States which make it a crime to operate a bucket shop. [2] Typically the criminal law definition refers to an operation in which the customer is sold what is supposed to be a derivative interest in a security or commodity future, but there is no transaction made on any exchange. The transaction goes 'in the bucket' and is never executed. Without an actual underlying transaction, the customer is betting against the bucket shop operator, not participating in the market. Operating a bucket shop would also likely involve violations of several provisions of US federal securities or commodity futures laws[3].
| Contents |
| History in the United States |
| Origin of the term |
| House stock scam |
| Heraldic scam |
| Airline Ticket Consolidators and Bucket Shops |
| See also |
| References |
| External links |
History in the United States
Bucket shops specializing in stocks and commodity futures flourished in the United States in the late 1800s and early 1900s.[4].
In the United States, the traditional pseudo-brokerage bucket shops came under increasing legal assault in the early 1900s, and were effectively eliminated in the 1920s. However, the term came to apply to other types of scams, some of which are still practiced. They were typically small store front operations that catered to the small investor, where speculators could bet on price fluctuations during market hours. However, no actual shares were bought or sold: all trading was between the bucket shop and its clients. The bucket shop made its profit from commissions, and also profited when share prices fell.
The terms of trade were different for each bucket shop, but bucket shops typically catered to customers who traded on thin margins, even as low as 1%. Most bucket shops refused to make margin calls, so that if the stock price fell even momentarily to the limit of the client's margin, the client would lose his entire investment
The highly leveraged use of margins theoretically gave the speculators equally large upside potential. However, if a bucket shop held a large position on a stock, it might sell the stock on the real stock exchange, causing the price on the ticker tape to momentarily move down enough to wipe out its clients margins, and the bucket shop could take 100% of their investments.[5]
Origin of the term
There are two reported origins of the term ''bucket shop''. First, that it was applied to low-class London drinking establishments that sold the dregs of other saloons - by the bucket. Second, it described London grain dealers who dealt in smaller grain contracts than did the Board of Trade. In either case, ''bucket shop'' came to apply to low-class pseudo stock brokerages that did not execute trades.[6]
The term "bucketshop" as now applied in the United States, was first used in the late [18]70s, but it is very evident that it was coined in London as many as fifty years ago, when it had absolutely no reference to any species of speculation or gambling. It appears that beer swillers from the East Side (London) went from street to street with a bucket, draining every keg they came across and picking up cast-off cigar butts. Arriving at a den, they gathered for social amusement around a table and passed the bucket as a loving cup, each taking a 'pull' as it came his way. In the interval there were smoking and rough jokes. The den soon came to be called a bucketshop. Later on the term was applied, both in England and the United States, as a byword of reproach, to small places where grain and stock deals were counterfeited. [7]
House stock scam
The term bucket shop is now applied to any fraudulent stock-selling operation such as a boiler room, which has an undisclosed relationship with the company being promoted or undisclosed profit from the sale of house stock being promoted. A bucket shop promotes (via telephone or email) thinly traded or even fraudulent investments.
Heraldic scam
An "heraldic bucket shop" is a heraldry company that will sell a coat of arms associated with the customer's surname. Sometime a company will create a coat of arms for a surname that never had a coat of arms. These coats of arms are almost always those of someone long-dead and of no relation to the customer. Most bucket shops maintain computerized data-bases, or buckets, compiled from old manuscripts, armories, or ordinaries. In most European traditions, a coat of arms must be inherited. Just because someone named "Smith" possessed a coat of arms does not mean that everyone named "Smith" has a right to use that armorial achievement.
Airline Ticket Consolidators and Bucket Shops
Some sellers of discounted airline tickets are referred to as 'bucket shops' [8]
See also
★ Forex scam
★ (Heraldry Scam)
References
1. http://www.cftc.gov/opa/glossary/opaglossary_b.htm Glossary, US Commodity Futures Trading Commission website.
2. For example, see California's definition, Washington State's definition, Pennsylvania's definition, or Mississippi's definition.
3. http://caselaw.lp.findlaw.com/cgi-bin/getcase.pl?court=4th&navby=docket&no=001488p See, for example, CFTC v. Baragosh (currency futures bucket shop)
4. http://www.historycooperative.org/cgi-bin/justtop.cgi?act=justtop&url=http://www.historycooperative.org/journals/jah/93.2/hochfelder.html
5. Edwin Lefevre (1923) ''Reminiscences of a Stock Operator'', reprinted 1968, New York: Simon & Schuster. (although a novel, the book is regarded as a ''roman a clef'' of the life of actual stock operator Jesse Livermore).
6. Ann Fabian (1999) ''Card Sharps and Bucket Shops'', New York: Routledge, p.189.
7. Hill, John Jr., ''Gold Bricks of Speculation'', (Chicago, Il.,: Lincoln Book Concern, 1904) p.39. Quoted in Markham, Jerry ''The History of Commodity Futures Trading and its Regulation'', (New York, Praeger, 1987) Chapt. 1 n.13.
8. Airline Ticket Consolidators and Bucket Shops FAQ
External links
The following are websites purporting to sell the coats of arms of various surnames, though in most heraldic traditions, no such thing exists.
★ Coat of Arms Store
★ All Names Heraldry & Coat of Arms
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