Someone decided to do a special screening of the latest Martin Scorsese film the Wolf of Wall Streetdown in my old neighborhood behind the Goldman Sachs building in downtown New York City. The crowd attending the film was described as a “finance-heavy audience” with brokers, traders and investment bankers filling the seats. Their reaction to criminal misdeeds of the films main character Jordan Belfort…”gleeful.”
The audience cheered the cocaine and the yacht, and they really whooped when Belfort, forced by the Feds to wear a transmitter, slips somebody a note saying… “Don’t incriminate yourself. I am wearing a wire.”
The movie is about investment con artist Jordan Belfort who founded the now defunct brokerage firm Stratton Oakmont. They were one of the worse offenders in the pump and dump stock world, ripping clients off to the tune of hundreds of millions of dollars. The film did not show the carnage and pain that Belfort and his army of phone terrorists caused throughout the country, it instead focused on their hedonistic behavior. The film was an ode to drug use and hookers and I hated every minute of it. The film,Boiler Room, from 2000 was far superior in every way, shape, manner and form. I would recommend it to anyone wanting a more accurate depiction of the pump and dump Wall Street world.
The positive pep rally reaction from the Wall Street guys should not surprise anyone. Jordan Belfort is a hero to them, someone who did not care, made a fortune, and for all intents and purposes got away with it. (Belfort did 22 months in a country club jail spending his days working out and working on his tennis game. He is about to get his own reality show.) Belfort has lived the dream, the Wall Street dream, money houses, cars drugs, yachts mistresses and hookers. All of this with zero remorse for the people he has destroyed and little to no consequences for his actions. Basically what we have been reporting on for fourteen years now on the air and almost twenty years in our newsletter.
J.P. Morgan Chase has finalized a deal with Manhattan U.S. Attorney Preet Bharara for some $2 billion over the fact that J.P. Morgan knew about the entire Bernard Madoff scandal and in fact aided and abetted his crime. J.P. Morgan Chase had been in business with Madoff for some twenty years and yet claims that that they did not have the proper systems in place to detect the fraud, which is one of the more bodacious deceits I have heard in a while. What J.P. Morgan knew was that they were making money off of Madoff. They could give a rat’s behind how he was doing it. Of course, like clockwork, nobody from J.P. Morgan will be prosecuted.Juxtapose the case last year of the “London Whale” trading debacle; where an employeeof J.P. Morgan loses J.P. Morgan $6 billion in bad trades. Employee goes to jail. The lesson here is if you are going to rip some one off, make sure it is the clients, not the firm.
What also reeks about this case is the fact that the United States government is collecting from this case. Only a portion of the money will be going to the victims of the swindle, Uncle Sam also has to “wet its beak.” The Wall Street Journal describes the situation quite succinctly…
“For the federal government to receive even a nickel of this recovery would represent as slick a swindle as anything Madoff ever did. Starting at least as early as 1992 the Securities and Exchange Commission began ignoring the red flags around Bernie Madoff. That year two accountants were charged with marketing Madoff investments with bogus promises of sky-high returns, but apparently it never occurred to regulators that the problem might lie with Madoff. Beginning around 2000 and for years afterward, trader Harry Markopolos implored the SEC to act. The SEC did look into Madoff’s operations at least four times between 1999 and 2007. But regulators cited only minor violations and allowed him to continue stealing from victims until the fraud collapsed in 2008.”
Bernie Madoff had powerful friends in government. Bernie Madoff made enough in political donations to keep any meddling agent off his back. Could you imagine being an SEC agent trying to take on a guy who has Senator Frank Lautenberg and Senator Chuck Schumer on his speed dial? Uncle Sam has quite a bit of nerve collecting a fine when their efforts or lack there of, can only be described as an epic failure.
The sad reality of Wall Street today is that the wolves have become bigger, stronger, more dangerous and powerful than anything the boiler room operators could ever be. Werewolves would be a more accurate description. Unfortunately the only silver bullet is investor education. Avoid these firms at all costs or to quote Dante, “Abandon all hope ye who enter here.”
Perlberg Steven We Saw Wolf Of Wall Street With a Bunch Of Wall Street Dudes And It Was DisturbingBusiness Insider 12/19/13
Fitzpatrick Dan J.P. Morgan Officials Excluded From Penalties In Madoff DealWall Street Journal 1/6/14
Fitzpatrick Dan & Eaglesham Jean JPMorgan To Pay More Than $2 Billion To U.S. InPenaltiesWall Street Journal1/5/14
Editors Another Madoff Swindle Wall Street Journal 1/6/14