Bucket Shop

What does Bucket Shop mean in American Law?

The definition of Bucket Shop in the law of the United States, as defined by the lexicographer Arthur Leff in his legal dictionary is:

An illegal operation in which orders are taken for the buying and selling of securities without any of the orders being actually executed. Instead, the operators in effect bet on the movement of the stock prices: If the buyer demanded the stock he paid for, it could be delivered to him easily if its price had declined below what he paid; if it had appreciated in value, the bucket shop runners often had to run. In some cases, the investors apparently knew that no securities were to be bought, and that the bucket shop was, in effect, a bookmaking operation involving securities prices rather than horse races. In this latter form, the customers presumably expected to be paid if they won. Cf. boiler room.

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See Also

• Wager