High Tech Boiler Room
The 2000 film Boiler Room depicts the seedy world of the “pump-and-dump” scam. In it, a broker purchases a large block of public stock in a shell (i.e. empty) company. The firm then calls potential clients to pitch them the same stock. This drives up (“pumps”) the price, making it appear to be a runaway stock, thus attracting more buyers and driving the price higher.
When the price is high enough, the broker “dumps” their own shares at a huge profit and walks away. The result is that the buyers are left holding stock in a worthless, basically non-existent company, which promptly falls back to zero, wiping out the investors.
Which brings us to Silicon Valley. Over the past decade or so, Silicon Valley has morphed from a region that was the builder of great companies (Apple, HP, Intuit, Cisco, Oracle, etc), into perhaps the greatest generator of “pump and dump” stocks.
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