Introduction
Jordan Belfort is a former stockbroker whose career came to an end when he was arrested and ultimately sent to prison for crimes related to insider trading. His story is that of a classic transgressor of the law. Belfort made it his mission to conduct illegal insider trading activities that enabled him to accumulate a fortune but left many of his investors and clients with large losses. Belfort’s story is a cautionary tale of the dangers of greed and the consequences of manipulating the stock market. It is also a stark reminder of the need for greater regulation and oversight in the world of Wall Street.
The Dark Side Of Wall Street – What Does It Mean?
The clouded side of Money Road alludes to the numerous criminal operations that occur on Money Road, from misrepresentation, insider exchanging, market control, and pay off. These exercises put the public’s speculations in danger and establish a perilous climate on Money Road, one where defilement is widespread and the privileges and interests of financial backers are frequently disregarded.
Life Before The Dark Side Of Jordan Belfort
Jordan Belfort was born in 1962 in Queens, New York. He raised himself middle class and attended university, where he majored in biology and psychology. After school, he started his vocation as a stockbroker, dealing with the honest as a bonafide Money Road proficient. He got going with a temporary position on the floor of the New York Stock Trade, ultimately moving gradually up the professional bureaucracy at speculation banks like L.F. Rothschild and D.H. Blair and Co.
Becoming A Wall Street Broker
In 1987, Jordan Belfort decided to leave his job at L.F. Rothschild and start his own stock-broking firm. He recruited some of his former colleagues and founded Stratton Oakmont – a company specializing in penny stocks. The firm was a huge success, and BelfThe Rise & Fall of Stratton Oakmont
Building A Financial Empire
The meteoric rise of Jordan Belfort and his firm Stratton Oakmont, is a remarkable story of early success, greed, and ultimately, federal prosecution. Belfort and his partner Danny Porush established Stratton Oakmont in 1989 as a penny stock brokerage firm based out of a small lake-side office in Long Island.
Belfort’s ambition and determination to succeed, coupled with his adeptness for sales, enabled Stratton Oakmont to become a financial empire in a very short space of time. Initially, Belfort set out to use legitimate means to grow the firm, through recruiting, cold-calling, and project perfecting the ‘hard sell’ technique to sell stocks to clients. With success came opulence for Belfort and those surrounding him, with annual salaries of his traders reaching six-figure figures and extravagant bonuses becoming commonplace.
Stock Pump & Dump Schemes & The World Of Jordan Belfort Insider Trading
Belfort would hone his trading prowess and start evangelizing the benefits of investing in “penny stocks” to others. However, everything went downhill once Stratton Oakmont began running the company like a boiler room.
During the heyday of the boiler room, Belfort would pump up the price of penny stocks through aggressive marketing. Then, Belfort would give the order to dump the stock to his team of investors, earning him millions.
At its peak, Stratton Oakmont had over a billion dollars in shares issued and employed over a thousand dealers.
Investors lost a lot of money due to this fraud, and the authorities caught on swiftly.
As Stratton Oakmont grew, the financial unscrupulousness of Belfort enabled the firm to embrace unethical methods to increase revenue. This came with engaging in stock pump and dump schemes – a form of market manipulation – whereby Belfort artificially inflated the value of cheap and obscure penny stocks by falsely driving up the demand for them.
This was unethically achieved by means of the firm’s stock brokers misleading clients in phone calls to purchase and invest in the penny stocks, while at the same time corresponding to other trading desks – ‘the boiling rooms’, as they became known – to purchase the same stocks to work in tandem. This enabled Stratton Oakmont to drive up the price of the stock, then quickly sell to unsuspecting customers for a huge profit.
Additionally, Belfort and his traders engaged in trading on insider information. With powerful contacts in the finance industry having access to confidential information in relation to the financial performance of public companies, Belfort and co would utilise such information to their advantage; buying and selling stocks to the public ahead of public announcements of unfavourable news – mergers, bankruptcies- and pocketing the profits.
Perpetrating Fraud
The fraudulence of Belfort and his firm eventually started to unravel as law enforcement began to put the pieces of the Stratton Oakmont puzzle together. Shortly after Stratton Oakmont began to engage in unethical practices such as insider trading and the stock pump and dump schemes, the Department of Justice issued a 50-count indictment.
The trials exposed the full scale of Belfort-sanctioned swindling, with Belfort himself accusingly of laundering over $100 million, conspiring to manipulate clearing documents, diverting Stratton Oakmont investors’ money to offshore accounts, and even using the money to buy his yacht.
At Belfort’s trial in Florida, the presiding judge harshly reprimanded the plaintiff for his role in perpetuating a “scam of humongous proportions” – stating that Belfort had stolen “from people [he] knew”.
The court sentenced Belfort to four years in prison, to be followed by three years probation and restitution of $110 million. He had to close the doors of Stratton Oakmont forever, and the events of that chapter of Wall Street tarnished the reputations of those closely associated with the operation.ort eventually stepped away from the day-to-day operations to focus on investment banking, consulting, and managing investments.
By the early 1990s, he had become a multimillionaire through fraudulent activities, such as insider trading. Bolstered with the financial security he had earned, Belfort soon became immersed in the dark side of Wall Street. People knew him for his fast-paced lifestyle and lavish parties, as well as his disregard for the law. His prominence on Wall Street earned him the nickname “The Wolf of Wall Street.”
Jordan Belfort Insider Trading: Criminal Investigations & Consequences
After his business practices at Stratton Oakmont, Jordan Belfort became the target of several criminal investigations. Multiple agencies targeted him, Belfort pleaded guilty to 10 counts of securities fraud and money laundering. The court sentenced him to four years in prison and an additional three years of supervised release. During his supervised release, Belfort agreed to cooperate with the government and pay restitution to his victims.
Several defrauded investors hit Belfort with civil lawsuits as a result of his criminal activity. They fined and sentenced Belfort to pay reparations of over $100 million, and permanently barred him from the securities sector.
Types Of Insider Trading Investigations For Jordan Belfort Insider Trading
U.S. Securities And Exchange Commission Investigation (SEC)
The SEC investigated Jordan Belfort and his firm, Stratton Oakmont, for illegally selling unregistered securities. The SEC also accused Belfort and Stratton of insider trading and other fraudulent stock trading activities. Ultimately, Belfort paid more than $110 million in fines and restitution.
Commodity Futures Trading Commission Investigation (CFTC)
The CFTC investigated Jordan Belfort for false and misleading sales claims and for operating a fraudulent commodities trading scheme. This scheme, which Belfort called ‘The Commodity Pool’, involved pooling investor funds to make trades in commodities futures.
U.S. Attorney’s Office Fraud Investigation
Belfort and Stratton were investigated for alleged securities fraud and money laundering. The investigation involved a broad array of activities, including the use of phony accounts and inflated brokerage statements.
U.S. Department Of Justice Investigation
This investigation focused on Belfort’s involvement in pump-and-dump schemes and his promotion of Stratton Oakmont to investors.
Internal Revenue Service Investigation
The Internal Revenue Service (IRS) investigated Jordan Belfort and Stratton Oakmont for failure to pay taxes on income that resulted from Belfort’s fraudulent trading activities.
New York Stock Exchange Investigation
The NYSE investigated and took action against Belfort and some of his colleagues for insider trading.
New York State Attorney General Investigation
The New York State Attorney General investigated Belfort and Stratton Oakmont for criminal fraud and other violations of state securities law. The Attorney General ultimately sued Belfort, his partners, and Stratton Oakmont for illegal business practices.
Jordan Belfort Redemption
After his release from prison in 2005, Belfort sought to rebuild his life. He began writing about his experiences in a bestselling autobiography titled The Wolf of Wall Street. Although he was still struggling to pay off the restitution agreed to in his plea deal, the book proved that Belfort was ready to turn a new leaf.
In the years that followed, Belfort went on to become something of a celebrity. He became a motivational speaker, business coach, and consultant. Belfort now spends his days helping teach people how to lead better lives and succeed in business.
Who Is In Jordan Belfort Insider Trading?
Jordan Belfort
He was the ringleader of the infamous late-80s insider trading scandal, often referred to as the “Wolf of Wall Street.” A court sentenced Belfort to four years in prison for securities fraud and related crimes.
Danny Porush
Porush was Belfort’s partner in the illegal operation and was also convicted of insider trading.
Mark Hanna
Hanna was the unassuming family friend of Belfort who encouraged him to pursue a career in Wall Street.
Stratton Oakmont
Stratton Oakmont was the now-defunct brokerage firm, founded by Belfort and Porush which helped facilitate Belfort’s illegal activities.
Kenneth Lipper
Kenneth Lipper was Belfort’s mentor and partner in the venture. He was prosecuted by prosecutors for falsifying financial records in support of Belfort’s activities.
FBI Agents
The higher authorities tasked FBI agents with investigating the case and apprehending all those guilty of insider trading.
SEC Agents
SEC is the Securities and Exchange Commission of the United States, and its agents were responsible for the enforcement of the corporate laws governing insider trading and other financial offenses.
Prosecutors
Prosecutors were the ones who built the case against Belfort and the other syndicate members under the law and successfully convicted them.
Time Line
1970s
Jordan Belfort begins his career as a stockbroker on the New York Stock Exchange.
1980s
Belfort is introduced to the “dark side” of Wall Street and becomes a master of insider trading.
1987
Belfort and his associates begin using a “pump and dump” scheme to make profits from manipulation of stock prices.
1990
Belfort’s Stratton Oakmont securities firm becomes one of the largest in the nation.
1991
The SEC takes notice of Belfort and his activities and begins investigating him.
1992
Belfort is indicted on 35 counts of fraud, money laundering, and securities law violations.
1994
Belfort pleads guilty to 10 counts of security fraud.
1995
Belfort begins serving a four-year federal prison sentence at the Federal Correctional Institution in Otisville, New York.
1996
Belfort is released from prison.
1997
Belfort publishes his memoir, The Wolf of Wall Street, detailing his life as a stockbroker and his involvement in insider trading.
1998
The film adaptation of Belfort’s memoir is released, starring Leonardo DiCaprio in the title role.
1999
Belfort is ordered to pay the Securities and Exchange Commission over $110 million in restitution.
2002
Belfort begins giving motivational speeches about his life on Wall Street and teaches clients how to recognize fraud.
2009
Belfort writes a follow-up to The Wolf of Wall Street, titled Catching the Wolf of Wall Street.
2011
Belfort returns to Wall Street to work with his former partner Danny Porush in financial consulting.
2013
A documentary by Hollywood producer, Stephen Wexler, titled Inside the World of Insider Trading, is released.
2015
Belfort is featured on a TEDx talk about his experience on Wall Street and his journey from riches to rags.
2020
Belfort continues to write and lecture about his life on Wall Street and serves as a cautionary tale for investors.
Conclusion
Jordan Belfort’s story of his success and descent into the dark side of Wall Street is a cautionary tale about the risks of greed and the dangers of insider trading. His story serves as a reminder of the importance of ethical behavior and financial discipline, even in the world of high finance and stock trading. By understanding the motivations and pitfalls of Belfort, we can better prepare ourselves for the ever-changing face of the financial markets.
Frequently Asked Questions
1. Who is Jordan Belfort?
Jordan Belfort is a previous stockbroker and sentenced criminal who assumed a significant part in the occasions of Money Road’s mid-1990s monetary embarrassments. He composed a journal about his encounters, named ‘The Wolf of Money Road.’
2. What did Jordan Belfort do?
Jordan Belfort partook in different criminal operations to produce benefits, including insider exchange and duping financial backers. He was at last captured and indicted for tax evasion, protections extortion, scheme, and other related charges.
3. What is ‘The Dark Side of Wall Street’?
The Clouded Side of Money Road is used to depict the obscure and frequently unlawful acts of stockbrokers and merchants who intend to take advantage of the framework for their own monetary benefit. Models incorporate insider exchange, stock control, and market control.
4. What is insider trading?
Insider exchanging is a criminal behavior in which people with admittance to secret data in an organization use it to acquire a benefit in the financial exchange. This generally includes trading shares given material non-public data.
5. What does ‘The Wolf of Wall Street’ teach us?
The Wolf of Money Road shows us the significance of monetary discipline and moral behavior. It underlines the results of ravenousness, overabundance, and the dangers of participating in criminal operations like insider exchange. It likewise fills in as an update that even in the realm of high money, taking into account the moral contemplations of our actions is fundamental.
