How not to start a business: The Wolf of Wall Street
The Wolf of Wall Street is a black comedy based on the memoirs of former American stockbroker, Jordan Belfort, who was jailed for fraud in connection with stock market manipulation in 1999. The film, which was a massive hit in 2013, was directed by Martin Scorsese and written by Terence Winter.
Belford’s firm, Stratton Oakmont, of Long Island, was an “over-the-counter” brokerage house, launched in 1989. Over-the-counter trading is a type of trade that isn’t made on a formal stock exchange.
Most OTC trading takes place between two parties and as such, it is less regulated than exchange-based trading. This means as well as creating a range of opportunities, it can also be risky and participants should be aware of this. Unlike trading on the exchange, where there are multiple buy and sell prices listed, OTC trading lists only a single “buy” price and a single “sell” price.
Initial objective
Stratton Oakmont’s main objective was to trade fairly and honestly. Belfort started out as a franchisee of a minor broker-dealer, Stratton Securities, but he went on to make enough money to buy out the whole firm.
However, what started out as a reputable company went downhill fast, when his greed took over. In later interviews, Belfort said his attitude was he wanted money – and he wanted it NOW! Stratton Oakmont became involved in a practice called “pump-and-dump” schemes.
These are a form of stock fraud, when the price of owned stock is artificially inflated – “pumped” – through false and misleading positive statements. Then, the cheaply-bought stock can be sold on at a higher price. However, when the scheme operators “dump” their overvalued shares, the price falls and the investors suffer a financial loss.
As Belfort went further down the wrong path, he admitted he had a “desire for instant gratification” financially, which lead to him making some poor decisions. He looked only to the immediate future and the impulsive desire to grab as much money as possible. Subsequently, the business became unsustainable and many shareholders were defrauded and lost considerable sums of money.
Belfort became an expert in the art of hard sell and he recruited friends whom he also trained in the same methods. The sales technique pressured potential buyers to agree to a purchase. Stock brokers at Stratton Oakmont, which sounded a respectable company, spent their time cold-calling people and persistently persuading them to buy the stocks.
Lavish lifestyle
Initially, Belfort’s “get rich quick” scheme enabled him to live a lavish lifestyle after making millions in the early 1990s. Born in 1962 in Queens, he celebrated his wealth with an excessive lifestyle, splashing out on a lavish mansion, private helicopter, luxury yacht, several sports cars and a multitude of extravagant gadgets.
However, his greed eventually caught up with him, after he failed to keep his company on the straight and narrow. The “pump-and-dump” scheme worked for a while because new investors were quick to replace those who had lost all their money, but eventually, it became public knowledge what was happening.
The US Securities and Exchange Commission put an end to his fun at other people’s expense when they began investigating Stratton Oakmont’s stock dealings. In 1994, Belfort was banned for life from working in the securities industry after it was claimed his company had defrauded investors and manipulated stock prices.
Jail term
His company was ordered to be liquidated in 1996 to pay off fines and settlements. In 1999, he pleaded guilty to securities fraud and money laundering. In 2003, he was sentenced to four years’ imprisonment, serving 22 months. He was also personally fined $110 million – he is still paying off the debt to this day.
Belfort has written two autobiographies, using the nickname given to him by the media for the title of both books. The Wolf of Wall Street was published in 2008 and Catching the Wolf of Wall Street in 2009.
The film of his life story stars Leonardo DiCaprio. DiCaprio also co-produced the film, which featured Kyle Chandler as FBI agent Patrick Denham and Matthew McConaughey as Belfort’s first boss, Mark Hanna, who introduced him to the world of crazy wealth.
Chest thumping scene
McConaughey was responsible for one of the film’s most iconic moments, the chest thumping scene, which was spontaneous and not even in the script! In the scene, Hanna and “newbie” Belfort had sat down to lunch together.
They had done five takes and Scorsese and the actors were happy with the end result, but DiCaprio had noticed McConaughey doing something rather odd between takes – he was intrigued. After filming the scene, he said, “Hang on a second – what were you doing?”
In interviews after the film’s release, McConaughey explained it was a relaxation technique, during which he would beat his chest and hum. He had done it before every take on The Wolf of Wall Street and then once the director yelled “action” and they started filming the scene, he would stop doing it.
DiCaprio asked if he’d like to try it in the scene, so McConaughey agreed. It was incorporated at the end of Hanna’s conversation with Belfort and became a test to see if the latter “got it” and was “on the same frequency”, according to McConaughey. The scene worked and appeared in the final cut.
The star’s personal relaxation technique has become a piece of popular culture!
I’m not leaving!
Another famous scene was Belfort’s “I’m not leaving!” speech – when he announces decisively that he doesn’t intend leaving the company.
This clip is still widely shared around the internet, five years on, with the anti-hero’s speech prompting people to rally round him, even though he’s committed crimes. The speech is often quoted, with Belfort insisting, “I’m not leaving. The show goes on. This is MY home! They’re gonna need a wrecking ball to take me outta here!”
It has become so embedded in popular culture that former Liverpool footballer Steven Gerrard quoted it in his autobiography, My Story, when he admitted imagining himself saying it as he prepared to leave Anfield for America.
He said that six weeks before jetting off for his new career in the US, he “rocked with laughter” as he pictured himself standing up and saying, “You know what? I’m not leaving!” as the sun sank over the Kop. He revealed he still had the clip from The Wolf of Wall Street on his mobile phone.
Commercial success
Distributed by Paramount, the film premiered on 17th December 2013 in New York and was a massive hit, grossing more than $392 million at the global box office. It was nominated for five Academy Awards, including Best Picture. DiCaprio won a Golden Globe for Best Actor.
However, some critics complained that the film glorified Belfort’s actions, rather than painting a more realistic picture of the fact people lost lots of money as a result of his company. Belfort later described himself as having been a “wolf”, the implication being that he preyed on other people’s naivety. However, he claims to have become a “more benevolent character” after being caught and put in jail.
Today, he lives in Los Angeles and runs his own company, providing advice on sales, marketing and accumulating wealth.
Unethical path
Belfort’s actions are not the right way to go about starting up businesses. He admits he took the wrong path and says he has come to realise that “success in the absence of ethics and integrity is not success, it’s failure.”
He said that while writing his books, he had plenty of opportunity to do a lot of self-reflection. He began to see fault in his values and finally realised the error of his ways. In a newspaper interview, he said, “I lost my ethical way and I destroyed myself.”
Headspace’s working environments make the perfect setting for your business to grow and blossom. To start your business off on the right footing, give us a call on 020 3691 7500 for details of our flexible workspaces.
