Bucket shop
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Bucket shop is a colloquial phrase which refers to different kinds of businesses, each of which is a scam.
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The original meaning of bucket shop
A "bucket shop" in its original format was a shop with a counter under which was a bucket. It offered a high rate of interest on clients' deposits, took money in and put it in the bucket and when someone withdrew their money, would take capital and income from the bucket. It was of course a triumph of optimism over intellect and was guaranteed to rapidly fail.A brokerage scam
An institution where one could buy and sell stock, though it was not a legitimate brokerage firm. When a customer placed an order it was written on a slip of paper and tossed into a bucket rather than being immediately transmitted to the floor of a stock exchange, whence comes the name "bucket shop." These bucket shops were typically small store front operations that catered to the small investor prior to the stock market crash of 1929. The bucket shop would at a later time match up buys and sells to increase its own profit. The customer had little way to know the actual price at any exact moment. The bucket shop could match a buy at $10 with a sell at $9 and pocket the $1 difference. As long as the bucket shop reported prices within the day's high low range, the customer had no way of detecting the fraud. The bucket shop could shift its recommendations to correct any imbalance in the buy-sell orders in its own bucket. Today's instant price quotes and executions have eliminated the original scheme, but the term has come to be applied to any fradulent brokerage type operation such as boiler rooms.A house stock scam
A stock brokerage which has an undisclosed relationship with the company being promoted or undisclosed profit from the sale of house stock they are promoting. A bucket shop promotes (via telephone calls to brokerage clients or spam email) thinly traded stocks. The bucket shop usually holds a large position in the stock and plans to dump it on brokerage clients at a high price. The bucket shop usually had close ties to or the same owners of the company whose stock is being promoted. The term bucket comes from the idea that if all the stock is sold, the company will print or issue another bucket of stock for the stock promoters to sell creating a never ending stock dilution.A heraldic scam
A "heraldic bucket shop" is a heraldry company that will sell one a coat of arms associated with the same surname as the customer. These coats of arms are invariably those of someone that is long-dead and of no relation to the customer. Most bucket shops maintain computerized data-bases, or buckets, compiled from ancient manuscripts, armories or ordinaries. In most European traditions, a coat of arms is something that can be inherited. Just because someone with the surname of "Smith" possessed a coat of arms, that does not mean that all others with the surname of "Smith" have a right to use that armorial achievement.See also
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