The Wolf of Wall Street depicts the meteoric rise and fall of über salesman Jordan Belfort, the creator of penny stock dealer Stratton Oakmont. At the beginning of the film Belfort is shown as a young man at the outset of a journey: starting his securities career at a prestigious Wall Street brokerage. However, had the film begun just a little earlier, we may have instead seen Belfort emerging from a meeting of creditors as part of the Chapter 7 bankruptcy case that he filed when he was 25 years old.
Jordan’s rise from bankruptcy is referenced as the starting point for his dizzying success in the Forbes story that is prominently featured in the film:
AT 23, Jordan Belfort was peddling meat and seafood door-to-door on New York’s Long Island and dreaming of getting rich. Within months, he was running a string of trucks, moving 5,000 pounds of beef and fish a week. But he expanded too quickly on too little capital. By the time he was 25, he owed over $10,000 and filed for personal bankruptcy.
In the movie and in real life, Belfort was thrown into uncertainty after his firm, L.F. Rothschild, founded in 1899, went defunct in the wake of the 1987 stock market crash (resulting in a Chapter 11 filing for the holding company, L.F. Rothschild Holdings Inc. in 1989). With a focus on Belfort’s fast-talking but old-fashioned hucksterism, the film has Belfort landing on his feet and making an obscene amount of money by creating Stratton Oakmont, a venue for Belfort to become a “twisted Robin Hood who takes from the rich and gives to himself and his merry band of brokers” according to Forbes staff writer Roula Khalaf.
SPOILER ALERT
Of course, it was inevitable in a Hollywood movie for a conman such as Belfort to fly so high without suffering a calamitous plunge, and Belfort certainly did that: he served a four year prison term for fraud and money laundering and by 1997 Stratton Oakmont had been closed by the SEC and found itself in its own bankruptcy case. Stratton Oakmont’s bankruptcy trustee eventually returned $3.9 million to investors from Stratton assets that remained after it collapsed, but this figure was only pennies on the dollars lost from investors who were grossly injured by the fraud.
The Oscar-nominated film may well have become the poster child for the good and ill of bankruptcy. In its before picture, Belfort’s personal bankruptcy demonstrates the classic philosophy of debt relief at its finest: offering an individual a fresh start after his best laid plans go awry. For Belfort, his entrepreneurial dream of building a door-to-door steak and seafood empire that collapsed on poor planning and slim margins.
The latter bookend shows bankruptcy in its darkest form: a mop-up process sprung from a criminal enterprise that returns a pittance to the victims. (Crime and bankruptcy are frequent bedmates, as seen in this infographic The Bankruptcy Bighouse).
Is Belfort’s story an inspirational tale of recovery from failure or a cautionary fable of the evils of greed, or both? Please leave a comment and tell me your thoughts.
