The name of the infamous financier Jordan Belfort is becoming more and more public, not least because of the “wolf from Wall Street” movie, in which Leonardo DiCaprio played the speculator brilliantly. This production by the outstanding director Martin Scorsese has added to the fund of cinematographic works, revealing the veil of secrets over the world of multi-million dollar deals and financial fraud. In turn, for Belfort, who now earns his living by holding seminars all over the world, it has become a good advertisement.
As a matter of fact, the same service Hollywood provided to another trader in 1999 – Nicholas Lison, whose life story formed the basis of the film “The Fraudster”. Funnily enough, the two financiers have a lot in common: they were both accused of fraud and serving prison sentences, after which they were engaged in training and public speaking.
And another common feature: both “Wolf of Wall Street” and “The Fraudster” are based on the autobiographies of the same name, which became extremely popular among readers after the screening. The books written by Nicholas Leeson and Jordan Belfort are definitely worth reading: first of all, they will be interesting for speculative traders, as well as for managers of stock and banking organizations.
Biography of Belfort
Broker Jordan Belfort comes from New York, but his path to Wall Street began with the Bronx.
The future speculator grew up in a family of accountants who gave him a good upbringing on the whole. The Wall Street Wolf itself notes that it was easy to multiply four-digit numbers already at school age. He got his high school education in Queens and his university degree in biology in Washington, D.C
At a young age, he managed to earn over $ 20,000 in the resale of ice cream at a local beach. As J. Belfort recalls in his book, for this money he was going to study at the dentist. Nevertheless, interest in this undertaking was cut off by the root of his teacher, who said that the best times of dentists were far behind. This happened on the first day of classes, after which Belfort immediately took the documents from the college and went to study as a biologist..
Mastery of tickers, quotes and trading instruments was preceded by a business of reselling food products, mainly meat and fish. At one point it reached a weekly turnover of more than 20,000 kg, but there was a banal lack of capital to expand. Having decided that the difference between steaks and stocks wasn’t that big, Jordan went to the investment firm L.F. to learn the basics of stock trading. Rothschild, which went broke in the wake of the 1987 stock market crash.
This was followed by the Investors Center, whose business was built on securities with low market value. In 1989 (a year after the arrival of Belfort), it was closed by order of the regulatory organization SEC. Nevertheless, she had enough time to gain experience to establish her own Stratton Oakmont agency – it was his work that was described in Scorsese’s The Wolf of Wall Street.
Belforth’s activities in Stratton Oakmont
The book published by Jordan Belfort mentions a peculiar approach to personnel selection. Instead of experienced traders and university graduates, the Stratton Oakmont ranks were often replenished by ambitious young people with minimal training – they did not have to be retrained. The result of this practice is an extensive team of more than 1,000 employees with a billion-dollar turnover. Belford itself controlled about 50% of the share in the enterprise.
The money management services offered by Stratton Oakmont were far from always being tested for honesty: in fact, the firm imposed on investors shares of dubious companies with the expectation of receiving benefits in the shortest possible time.
Sometimes more sophisticated techniques were used. For example, Forbes’ attention was drawn to the fragility of deals with the Ventura Entertainment Group, which developed all sorts of materials for television programs. The journalistic investigation conducted by the publication showed that the documents of the firm had been used to establish the firm on the day of its placement on the stock exchange. Stratton Oakmont’s traders convinced investors of the company’s profitability and the upcoming second issue. The last one took place, but it was followed by a statement of 455,000 losses. At the same time, according to Forbes, its revenue was about three million. In addition, the head of Ventura Entertainment Group, H. Bitrkoff, also managed an electronics supplier, Discovery Associates, which suffered the same fate.
Memorising this period, Jordan Belfort admits in his book that he could have built a transparent, honest business and earned more. And yet, under the circumstances, he gave preference to a quick profit.
Arrest and further career
Belforth came to the attention of law enforcement authorities in the second half of the 90s, and in 1998 he was convicted of fraud and money laundering. Unlike the main character of the Wall Street Wolf, the trader willingly cooperated with the FBI and even recorded his conversations with colleagues. The promotion of justice had helped him to reduce his prison sentence to 1 year and 10 months. In addition, the court ordered him to pay 110.4 million compensation to deceived investors – up to now 50% of Belfort’s profit is spent to pay off debts to society. While in prison, he met the actor Tommy Chong, who advised him to write a memoir. It was on the basis of this narrative that Wall Street Wolf was filmed.