The Wolf of Wall Street (11 page)

I was on a roll now, and as I continued speaking, my mind started to double track. I began totaling up the profits I was about to make. The awesome number
$20 million
came bubbling up into my brain. It was a good estimate, I figured, and the calculations were pretty simple. Of the two million units being offered, one million of them were going into the accounts of my ratholes. I would buy those units back from my ratholes at five or six dollars per and then hold them in the firm’s proprietary trading account. Then I would use the power of the boardroom, the massive buying this very meeting would create, to drive the units up to twenty dollars, which would lock in a paper profit of $14 or $15 million. Although, actually, I wouldn’t even have to drive the units up to twenty dollars myself; the rest of Wall Street would do the dirty work for me. As long as the other brokerage firms and trading firms knew I was willing to buy the units back at the top of the market, they would drive the price up as high as I wanted! I just had to leak the word out to a few key players and the rest would be history. (And this I’d already done.) The word on the street was that Stratton was a buyer up to twenty dollars a unit, so the wheels were already set in motion!
Unbelievable!
To make all that money and not commit a crime! Well, the ratholes weren’t exactly on the up-and-up, but still, it was impossible to prove. Ahhhh, talk about your unbridled capitalism!

“…like a rocket ship and keep on going. Who knows how high this stock could go? The twenties? The thirties? I mean, if I’m even half right, those numbers are ridiculously low! They’re nothing compared to what this company is capable of. In the blink of an eye the stock could be in the fifties or even the sixties! And I’m not talking about some far-off time in the future. I’m talking about right now, as we speak.

“Listen to me, everyone. Steve Madden Shoes is the hottest company in the entire women’s shoe industry. Orders are going through the roof right now! Every department store in America—chains like Macy’s and Bloomingdale’s, Nordstrom and Dillard’s—they can’t keep our shoes in stock. The shoes are so hot they’re literally flying off the shelves!

“You know, I hope you’re all aware that as stockbrokers you have an obligation to your clients, a
fiduciary responsibility
so to speak, to get on the phone with them the second I’m finished and do whatever it takes—even if it means ripping their fucking eyeballs out—to get them to buy as much stock in Steve Madden Shoes as they can possibly afford. I sincerely hope you’re aware of this, because if you’re not, then you and I are going to have some serious issues together after all this is said and done.

“You have an obligation here! An obligation to your clients! An obligation to this firm! And an obligation to yourself, God damn it! You better ram this stock right down your clients’ throats and make them choke on it until they say, ‘Buy me twenty thousand shares,’ because every dollar your clients invest is gonna come back to them in spades.

“I mean, I could go on and on about the bright future of Steve Madden Shoes. I could talk about all the fundamentals—about all the new store openings and how we manufacture our shoes in a more cost-effective way than the competition, about how our shoes are so hot that we don’t even have to advertise and how the mass merchants are willing to pay us royalties to have access to our designs—but at the end of the day none of it matters. The bottom line is that all your clients wanna know is that the stock’s going up; that’s it.”

I slowed my pace a bit and said, “Listen, guys, as much as I’d like to, I can’t get on the phone and sell the stock to your clients. Only
you
can pick up the phone and take action. And at the end of the day, that’s what it’s all about: taking action. Without action, the best intentions in the world are nothing more than that: intentions.”

I took a deep breath and plowed on. “Now, I want everybody to look down.” I extended my arm and gestured to a desk just in front of me. “Look down at that little black box right in front of you. You see it? It’s a wonderful little invention called the telephone. Here, I’ll spell it for you: T-E-L-E-P-H-O-N-E. Now, guess what, everybody? This telephone won’t dial itself! Yeah, that’s right. Until you take some fucking action, it’s nothing more than a worthless hunk of plastic. It’s like a loaded M16 without a trained Marine to pull the trigger. See, it’s the action of a highly trained Marine—a trained killer—that turns an M16 into a deadly weapon. And in the case of the telephone it’s the action of you—a highly trained Strattonite, a highly trained killer who won’t take no for an answer, who won’t hang up the phone until his client either buys or dies, someone who’s fully aware that there’s a sale being made on every single phone call and that it’s only a question of who’s selling who. Were you the one who did the selling? Were you proficient enough and motivated enough and gutsy enough to take control of the conversation and close the sale? Or was it your client who did the selling—explaining how he couldn’t make the investment right now because the timing was wrong or he needed to talk it over with his wife or his business partner or Santa Claus or the fucking tooth fairy.”

I rolled my eyes and shook my head in disgust. “So don’t you ever fucking forget that that phone sitting on your desk is a deadly weapon. And in the hands of a motivated Strattonite it’s a license to print money. And it’s the
great equalizer
!” I paused, letting those last two words reverberate around the boardroom, and then I kept right on going. “All you gotta do is pick up the phone and say the words I’ve taught you, and it can make you as powerful as the most powerful CEO in the country. And I don’t care whether you graduated from Harvard or you grew up on the mean streets of Hell’s Kitchen: With that little black phone you can achieve anything.

“That phone equals money. And I don’t care how many problems you have right now, because every single one of them can be helped with money. Yeah, that’s right; money is the greatest single problem-solver known to man, and anyone who tries to tell you different is completely full of shit. In fact, I’m willing to bet that anyone who says that never had a dime to their fucking name!” I held my hand up in the scout’s honor mode, and said with piss and vinegar, “It’s always those same people who are the first to spew out their worthless advice—it’s always the paupers, who sling around that ridiculous line of bullshit about how money is the root of all evil and about how money corrupts. Well—I—mean—
really!
What a bunch of happy horseshit that is! Having money is wonderful! And having money is a must!

“Listen to me, everyone: There’s no nobility in poverty. I’ve been rich and I’ve been poor, and I choose rich every time. At least as a rich man, when I have to face my problems, I can show up in the back of a stretch limousine, wearing a two-thousand-dollar suit and a twenty-thousand-dollar gold watch! And, believe me, arriving in style makes your problems a helluva lot easier to deal with.”

I shrugged my shoulders for effect. “Anyway, if anyone here thinks I’m crazy or you don’t feel exactly like I do,
then get the fuck out of this room right now!
That’s right—get the fuck out of my boardroom and go get a job at McDonald’s flipping burgers, because that’s where you belong! And if McDonald’s isn’t hiring, there’s always Burger King!

“But before you actually depart this room full of winners, I want you to take a good look at the person sitting next to you, because one day in the not-so-distant future, you’ll be sitting at a red light in your beat-up old Pinto, and the person sitting next to you is gonna pull up in his brand-new Porsche, with his gorgeous young wife sitting next to him. And who’ll be sitting next to you? Some ugly beast, no doubt, with three days of razor stubble—wearing a sleeveless muumuu or a housedress—and you’ll probably be on your way home from the Price Club with a hatchback full of discount groceries!”

Just then I locked eyes with a young Strattonite who looked literally panic-stricken. Hammering my point home, I said, “What? You think I’m lying to you? Well, guess what? It only gets worse. See, if you want to grow old with dignity—if you want to grow old and maintain your self-respect—then you better get rich now. The days of working for a large Fortune Five Hundred company and retiring with a pension are ancient fucking history! And if you think Social Security is gonna be your safety net, then think again. At the current rate of inflation it’ll be just enough to pay for your diapers after they stick you in some rancid nursing home, where a three-hundred-pound Jamaican woman with a beard and mustache will feed you soup through a straw and then bitch-slap you when she’s in a bad mood.

“So listen to me, and listen good: Is your current problem that you’re behind on your credit-card bills? Good—then pick up the fucking phone and start dialing.

“Or is your landlord threatening to dispossess you? Is that what your problem is? Good—then pick up the fucking phone and start dialing.

“Or is it your girlfriend? Does she want to leave you because she thinks you’re a loser? Good—then pick up the fucking phone and start dialing!

“I want you to deal with all your problems by becoming rich! I want you to attack your problems head-on! I want you to go out and start spending money right now. I want you to leverage yourself. I want you to back yourself into a corner. Give yourself no choice but to succeed. Let the consequences of failure become so dire and so unthinkable that you’ll have no choice but to do whatever it takes to succeed.

“And that’s why I say: Act as if! Act as if you’re a wealthy man, rich already, and then you’ll surely become rich. Act as if you have unmatched confidence and then people will surely have confidence in you. Act as if you have unmatched experience and then people will follow your advice. And act as if you are already a tremendous success, and as sure as I stand here today—you
will
become successful!

“Now, this deal opens in less than an hour. So get on the fucking phone right this second and go A to Z through those client books and take no prisoners. Be ferocious! Be pit bulls! Be telephone terrorists! You do exactly as I say and, believe me, you’ll be thanking me a thousand times over a few hours from now, when every one of your clients is making money.”

With that, I walked off center stage to the sound of a thousand cheering Strattonites, who were already in the process of picking up their phones and following my very advice: ripping their clients’ eyeballs out.

CHAPTER 9

PLAUSIBLE DENIABILITY

A
t one p.m., the geniuses down at the National Association of Securities Dealers, the NASD, released Steve Madden Shoes for trading on the NASDAQ stock exchange under the four-letter trading symbol SHOO: pronounced
shoe. How cute and appropriate that was!

And as part of their long-standing practice of having their heads up their asses, they reserved the distinguished honor of setting the price for the opening tick for me, the Wolf of Wall Street. It was just another in a long line of ill-conceived trading policies that were so absurd that they all but assured that every new issue coming out on the NASDAQ would be manipulated in one way or another, regardless of whether or not Stratton Oakmont was involved in it.

Just why the NASD had created a playing field that so clearly fucked over the customer was something I’d thought about often, and I’d come to the conclusion that it was because the NASD was a self-regulatory agency, “owned” by the very brokerage firms themselves. (In fact, Stratton Oakmont was a member too.)

In essence, the NASD’s true goal was to only appear to be on the side of the customer and to not actually be on the side of the customer. And, in truth, they didn’t even try too hard to do that. The effort was strictly cosmetic, just enough to avoid raising the ire of the SEC, who they were compelled to answer to.

So instead of allowing the natural balance between buyers and sellers to dictate where a stock should open, they reserved that incredibly valuable right for the lead underwriter, which in this particular case was me. I could choose whatever price I deemed appropriate, as arbitrary and capricious as it might be. In consequence, I decided to be very arbitrary and even more capricious, and I opened the units at $5.50 per, which afforded me the glorious opportunity of repurchasing my one million rathole units just there. And while I won’t deny that my ratholes would have liked to hold on to the units for a
weeeee
bit longer, they had no choice in the matter. After all, the buyback had been prearranged (a definite regulatory no-no), and they had just made a profit of $1.50 per unit for doing nothing and risking nothing—having bought and sold the units without even paying for the trade. And if they wanted to be included in the next deal, they had better follow the expected protocol, which was to shut the fuck up and say, “Thank you, Jordan!” and then lie through their teeth if they were ever questioned by a federal or state securities regulator as to why they sold their units so cheaply.

Either way, you really couldn’t question my logic in the matter. By 1:03 p.m.—just three minutes after I’d bought back my rathole units at $5.50 per—the rest of Wall Street had already driven the units up to $18. That meant I had locked in a profit of $12.5 million—
$12.5 million! In three minutes!
I’d made another million or so in investment-banking fees and stood to make another three or four million a few days from now—when I bought back the bridge-loan units, which were also in the hands of my ratholes. Ahhhh—ratholes! What a concept! And Steve himself was my biggest rathole of all. He was holding 1.2 million shares for me, the very shares NASDAQ had forced me to divest. At the current unit price of $18 (each unit consisting of one share of common stock and two warrants), the actual share price was $8. That meant that the shares Steve was holding for me were now worth just under $10 million!
The Wolf strikes again!

It was now up to my loyal Strattonites to sell all this inflated stock to their clients. All this inflated stock—not just the one million units they had given to their own clients as part of the initial public offering but also my one million rathole units that were now being held in the firm’s trading account, along with 300,000 bridge-loan units I would be buying back in a few days…and then some additional stock I had to buy back from all the brokerage firms that had pushed the units up to $18 (doing the dirty work for me). They would be slowly selling their units back to Stratton Oakmont and locking in their own profit. All told, by the end of the day, I would need my Strattonites to raise approximately $30 million. That would more than cover everything, as well as give the firm’s trading account a nice little cushion against any pain-in-the-ass short-sellers, who might try to sell stock they didn’t even own (with the hopes of driving the price down so they could buy it back cheaper in the future). Thirty million was no problem for my merry band of brokers, especially after this morning’s meeting, which had them pitching their hearts and souls out like never before.

At this particular moment I was standing inside the firm’s trading room—looking over the shoulder of my head trader, Steve Sanders. I had one eye on a bank of computer monitors directly in front of Steve, while my other eye looked out a plate-glass window that faced the boardroom. The pace was absolutely frenetic. Brokers were screaming into their telephones like wild banshees. Every few seconds a young sales assistant with a lot of blond hair and a plunging neckline would come running up to the plate-glass window, press her breasts against it, and slip a stack of buy tickets through a narrow slot at the bottom. Then one of four order clerks would grab the tickets and input them into the computer network—causing them to pop up on the proprietary trading terminal in front of Steve, at which point he would execute them in accordance with the current market.

As I watched the orange-diode numbers flash across Steve’s terminal, I felt a twisted sense of pride over how those two morons from the SEC had been sitting in my conference room, searching the historical record for some sort of smoking gun, while I fired off a live bazooka under their noses. But I guess they’d been too busy freezing to death, as we listened to every word they said.

By now, more than fifty different brokerage firms were participating in the buying frenzy. What they all had in common, though, was that each one fully intended on selling every last share back to Stratton Oakmont at the end of the day, at the very top of the market. And with other brokerage firms doing the buying, it would now be impossible for the SEC to make the case that I had been the one who’d manipulated the units to $18. It was elegantly simple. How could I be at fault if I hadn’t been the one who’d driven the price of the stock up? In fact, I had actually been a seller the whole way. And I had sold the other brokerage firms just enough to wet their beaks, so they would continue to manipulate my new issues in the future—but not too much that it would become a major burden to me when I had to buy the stock back at the end of the trading day. It was a careful balance to strike, but the simple fact was that having other brokerage firms bidding up the price of Steve Madden Shoes created plausible deniability with the SEC. And, in a month from now, when they were subpoenaing my trading records, trying to reconstruct what had happened in those first few moments of trading, all they would see was that brokerage firms across America had bid up the price of Steve Madden Shoes, and that would be that.

Before I left the trading room, my final instructions to Steve were that under no circumstances was he to let the stock drop below $18. After all, I wasn’t about to shaft the rest of Wall Street after they’d been kind enough to manipulate my stock for me.