After watching The Wolf Of Wall Street I have to ask, what did Jordan Belfort do criminally wrong exactly?
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The stock market is a heavily regulated price. It sets what you can charge for commission and sets caps on how much a stock can go up or down in a day. Jordan Belfort discovered that penny stocks were basically unregulated and no one was watching them. The average penny stock buyer was some poor shmuck who wanted to gamble and perhaps make $20 on them.
Jordan Belfort began upping the clientel on these things, attracting high grade buyers who would normally be interested in the S&P 500 or the Nasdaq stocks. He would sell them on your regular stocks and then introduce them to “entry level” positions on penny stocks. The commissions on these penny stocks were actually much better per dollar invested than regular stocks. Because of this a good broker could become very rich by selling a lot of them.
Belfort got greedy though. Belfort bought the penny stocks before directing his clients to buy them. When his clients showed up in waves to buy them Belfort would sell his shares while telling his clients to continue buying. It was like getting a double commission…. and was also stock manipulation.
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