Jordan Belfort: «That’s What Really Brought Me Down to Wall Street»

In the first part of a series, the real-life «Wolf of Wall Street» tells finews.asia about the $130 dirt bike that sparked his early desire to be rich, becoming a broker after filing bankruptcy with a meat and seafood business.

Jordan Belfort granted finews.asia an exclusive interview. He spoke at length about his upbringing, why he voted for Donald Trump, how he was corrupted by Wall Street’s endemic greed, how he smelled corruption surrounding 1MDB, which allegedly bankrolled the blockbuster movie based on his book, and how he lives now. Excerpts of the interview, which in a finews.asia first has been edited to remove some, but not all, profanity, will be published in a three-part series.

Jordan Belfort, you were always a seller: you set up a lemonade stand as a kid, shoveled driveways, and sold ice cream at Jones Beach in New York. Your first real business was in meat and seafood, where you realized you were good at motivating other salespeople. How?

I built this business up from one truck to 26 trucks within a year because of my ability to motivate and train people, but I had no knowledge of how to run a business in the right way – I made every mistake you can think of, and just like boom!, bankruptcy at the age of 23 or 24.

That’s what really brought me down to Wall Street.

«I'd just declared bankruptcy, and went to L.F. Rothschild and said, 'hire me!'»

I’d heard about a friend who made a lot of money down there and he wasn’t a particularly sharp kid growing up and he’s making a million bucks. $1 million didn’t even seem possible in 1985 or 1986. So I went down there and basically sold myself a job at a big firm, L.F. Rothschild. My resume wasn’t looking very good at this point: I was a dental school dropout, I’d just declared bankruptcy – «hire me!»

You grew up in a good family environment with values like hard word, honesty and integrity. What happened?

It’s hard to really pin it down. I’ve thought about it a lot obviously, because I’m like a case study. So I think more than that the more natural obvious pathway to see what happened is, how many really ethical people go to Wall Street and get fucked up there?

I’m not the only one, I just wrote about it. What is it about not just Wall Street but the environment you’re in, that sort of herd mentality that people do things they would never do themselves. Their beliefs start to change and there’s a drift in their ethics.

What about money?

I realized at about age 11 or 12, when I wanted to buy a dirt bike, it was a big thing. But my parents said, «we can’t afford it.» It cost something like $130 back then. And my mom and my dad sat me down and said «here’s what we make here’s our budget». And I was fucking appalled. They said we have to save for this, your college fund, other things, and we have no money left.

And at that point I linked up some very very crucial beliefs in my own mind. One was that just because you’re brilliant, educated, hard-working doesn't translate into money – there’s something missing from that equation.

How do you believe you were seduced by Wall Street?

You just have to accept this for being true. I don’t know if still is, it just is and anyone who thinks otherwise is kidding themselves.

It’s this weird kind of drift that happens, step-by-step, imperceptible steps and you dip your toe into piping hot bathtub and it’s hot. Ten minutes later it feels just fine.

«It's a culture thing on Wall Street. The interests of client and broker are not the same.»

When I was a kid, I thought the water had cooled down, but I just got used to it. And that’s what happened. It’s a culture thing there, a lot of it has to do with the fact that the interests of the client are not aligned with the interest of the broker.

You don’t see hedge funds getting in trouble for robbing their clients – they get in trouble for insider information – because they want to make money for their clients. And they get 20 percent.

But if you look at a broker buying and selling, the interests are not aligned and that’s responsible for a lot of the stuff that goes on.

You said you already knew from working at L.F. Rothschild’s that brokers didn’t genuinely care about their clients. When was your personal tipping point into illegality?

I went down to the penny stock firm and it’s different because the stocks are pieces of shit: they’re highly speculative, but the party line is that people can make them work. «It’s the next Apple!» – that’s the rationalization there.

When I first went down there, I knew nothing about the penny stock world. I knew very little about the actual stock market in terms of how it functions. When I went down to Wall Street, it was to become a stockbroker. I was a glorified salesman.

«As a kid, what else would you possibly think?»

I didn’t really know or understand how the stock market worked. They don’t teach you that. I took a Series 7, but that’s just rules and regulations. I went down there and started selling stuff and I didn’t even consider checking in about the companies. Because they all went public through file prospectuses, how could they be fraudulent if they were approved by the Securities and Exchange Commission? What else would a kid, would you possibly think?

Then after a few weeks I started to dig a bit. What happened is I immediately shattered the company records, by a long shot, and I had a sophistication from being at the big firm. Immediately they were all courting me at the management level, and asking me to train the brokers. I just remember becoming demoralized very quickly.

«I was still making $80,000 a month working two days a week»

I knew that they were speculative but I didn’t understand that a lot of them were never meant to work. The difference is that in the penny stock world, the stocks are not designed to work. They’re designed to make money for the firms who take them public.

And that’s the difference. There are some good penny stocks too, but we had these companies with massive numbers of outstanding shares, they were capitalized in such a way in which people got lots of free shares, so it had to become IBM to work, that’s the sort of thing. And that occurred to me after about a few weeks.

Within the first month I was well aware the stocks were shitty, and that bothered me a lot. So I stopped going there. I couldn’t go. I was there like two days a week. I hated it, but I was still making $80,000 a month, working two days a week.