Bucket shop

An illegal brokerage firm that accepts customer orders but does not attain immediate executions. A bucket shop broker promises the customer a certain price, but waits until a price discrepancy is present and the trade is advantageous to the firm and then keeps the difference as profit. Alternatively, the broker may never fill the customer's order but keep the money.

Bucket Shop

1. A brokerage that aggressively and often illegally sells its own securities to is clients because it wishes to divest itself and not because selling them is in the interests of the clients. The federal government limits bucket shop activities by limiting the over-the-counter transactions that brokerages are allowed to make.

2. A brokerage that agrees to buy or sell securities on behalf of clients at a given price, but instead buys at a lower price or sells at a higher price in order to keep the difference as profit.

bucket shop

An illegal operation in which buy and sell orders are accepted, but no executions actually take place. Instead, the operators expect to profit when customers close out their positions at a loss. A bucket shop is similar in concept to a bookie who does not lay off bets and accepts the risk of a bettor winning.

Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.

Bucket shop.

A bucket shop is an illegal brokerage firm whose salespeople pose as legitimate brokers and attempt to sell you securities.

Typically, a bucket shop broker doesn't actually purchase the securities you agree to buy and that you pay for. Rather, the con artists pocket your money and move on, disappearing before you realize you have been scammed.