Belfort is amazed that the folks joining hands to boost such names as GameStop and AMC on Reddit are turning the practice on its head. That big, sudden “dump” often sent stocks to near zero. Brokers would tout penny stocks to inflate their value, buying for their own account as prices soared, then foisting the shares on their investors at the peak. Dangerous for small investorsĪt Stratton Oakmont, the notorious Long Island boiler room he founded, Belfort and his brokers robbed mom-and-pop clients by orchestrating “pump and dump” schemes.
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Belfort now talks less like a flamboyant promoter than a former trader who’s seen it all and harbors strong views on how to fix what’s gone wrong on Wall Street. If Leonardo DiCaprio, his portrayer, had tried to imitate Belfort’s patois in the 2013 hit The Wolf of Wall Street, he might have needed subtitles. What does the Wolf think of the edifice crooked Bernie helped build?īelfort delivered his ideas in the thickest of thick Bronx accents. Atkin riposted, “If it’s so great for investors, why are your brokers keeping it a secret?” Atkin maintained, and still believes, that the practice bilks small investors and should be outlawed. Madoff bellowed, “I’m just trying to get more business!” Why should the SEC stop me from giving brokers the cash they want, he argued. offices over whether the practice should be allowed or barred.
In that story, I relate that Doug Atkin, former CEO of Instinet, the first electronic equity trading platform, got into a screaming match with Madoff in the SEC’s Washington, D.C. The future Ponzi schemer was the first market maker to pay brokers for routing their orders to his firm for processing. Amazingly, it was Madoff who launched the controversial system that the Reddit revolution brought front and center for regulators and Congress: payment for order flow. After all, I’d just done a piece on PFOF (payment for order flow) detailing the legacy of another flimflammer, Bernie Madoff. Does this past master of starting crazes see the Reddit phenomenon as a long-overdue democratization of the stock market, or a frenzy detached from the fundamentals of investing? I also wanted to get his view-as someone who knows how the money is really made in trading-on whether the “zero-commissions” offering that rallied the retail crowd is a boon or a rip-off. Robinhood,” I leaped at the opportunity to interview the reformed huckster. Who better than Belfort to opine on whether hordes of Gen Xers teaming to buy beaten-down stocks and online brokers selling order flow are good or bad for the little guy? When I recently received a blast email from a PR firm representing Belfort, offering his “expert opinion” on such issues as “Reddit vs. But Belfort reinvented himself as a motivational speaker and consultant to the likes of car dealerships and vacation rental outfits, and he takes pride in being able to discern the real deal from the crowd-pleasers and con jobs. He fleeced small investors out of $200 million, a scam that in 1999 landed him in prison for nearly two years.
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The self-proclaimed “The Wolf of Wall Street” (from his 2011 book and the 2013 Martin Scorsese movie of the same name) was a boiler-room impresario.
Jordan Belfort always knew how to push the hot buttons that got regular folks to crave what he was selling-in the old days, as a maestro of penny stocks.
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