Jordan Belfort, aka “The Wolf of Wall Street,” is a fast talker. So even in a short 30-minute phone interview, this reporter covered plenty of ground.
Including: Where the disgraced ex-broker stands in paying back his former clients whom he defrauded of $2 million, for which he was convicted of securities fraud and money laundering in 2003, ordered to repay $110.4 million and sentenced to four years in prison (in a plea deal, he served 22 months); why he has just published a how-to book based on the same sales system he used to swindle those investors; his dangerous drug addiction, as depicted in the movie — and more.
In an interview with ThinkAdvisor, Belfort, sober for 20 years now, calls the semi-revamped system he touts in “Way of the Wolf: Straight Line Selling: Master the Art of Persuasion, Influence, and Success” (North Star Way) “elegant and ethical” and even “more powerful” than the version he and other brokers at Belfort-owned Stratton Oakmont Inc. employed to defraud high-net-worth investors of millions.
Straight Line is also the system on which Belfort, 55, bases the pricey seminars he has conducted globally since his 2006 prison release and that he markets online.
From offices in Lake Success, Long Island, New York, Belfort and his team pumped and dumped penny stocks in a massive scam. In 1996, the National Association of Securities Dealers (NASD) closed down the firm. Belfort was indicted three years later.
Thereupon, the Securities and Exchange Commission “barred [him] from acting as a broker or investment adviser or otherwise associating with firms that sell securities or provide investment advice to the public,” according to BrokerCheck of the Financial Industry Regulatory Authority, NASD’s successor.
But neither Belfort’s website nor his new book specifies the crimes he and other Stratton brokers perpetrated from 1989-1994. Indeed, his online biography boasts that he “built one of the most dynamic and successful sales operations in Wall Street history”…”earned over $50 million a year” and employed more than 1,000 brokers.
The SEC began investigating Stratton in 1990. When NASD Regulation shut down the firm, Mary L. Schapiro, then president of NASD, said in a statement: “With this expulsion, NASD … has rid the securities industry of one of its worst actors.”
Belfort — who before launching Stratton was with L.F. Rothschild, D.H. Blair and other brokerages for two years, according to BrokerCheck — reportedly has paid $4 million to $5 million to a victims’ fund but 11 years after his prison release, still owes millions of dollars to the clients he swindled.
His current lucrative income stream includes royalties from two bestselling memoirs and the blockbuster 2013 “Wolf of Wall Street” film, starring Leonardo DiCaprio as Belfort during the Stratton years, a louche lout steeped in a lifestyle of depravity and debauchery dominated by greed, drugs and hookers.
Today, in addition to royalty and seminar income, Belfort is a consultant and trainer to a number of companies, such as Deutsche Bank, General Electric and Investec, his website states.
ThinkAdvisor recently interviewed Bronx, New York-born, Queens, New York-reared Belfort, who lives with his fiancee and business partner Anne Koppe in a tony oceanfront pad in Hermosa Beach, California, south of Los Angeles. Speaking from a New York City hotel shortly before a nearby book signing, he discussed what financial advisors can learn from his how-to book. As for the former broker, he asserts on his site that he’s learned valuable lessons from “the mistakes he made and the prices he paid” and “has re-emerged as a…potent force behind extraordinary business success.” Here are excerpts from our interview:
THINKADVISOR: What’s the most valuable takeaway for financial advisors who read your book?
JORDAN BELFORT: That persuasion is such a linchpin skill if you want to grow your business. Advisors and money managers don’t realize how crucial that skill is to succeed. You might have the best track record in the world and the best skill for making money; but if you can’t share it in a way that makes people want to give you a shot, then you’re going to end up — well, without that skill, Warren Buffett would have been the best unknown money manager in Omaha versus the Warren Buffett we all know and respect.
You recommend using BoomBoom Energy’s pocket inhaler to help attain a state of self-confidence before any sales encounter. Shouldn’t sales professionals be energetic and enthusiastic naturally and not need to take a whiff of menthol and citrus to get there?
I’m very fortunate that it’s very easy for me to pop into that positive state. Some people struggle with feeling [emotionally] “certain” sometimes. They need helpful ways to ensure that they’re in the right space. So for people who, sort of, wear their emotions on their sleeve, [BoomBoom] is very helpful.
Did you take a few blasts right before you called me?
No [laughs]. But that stuff is awesome, by the way.
Have you been following the industry issue about the Labor Department’s fiduciary standard rule?
No. What is it?
A controversial rule that says when a financial advisor is advising clients about their retirement accounts, they must act in the client’s best interest by adhering to a fiduciary standard. The rule was set to go into full effect on Jan. 1, 2018; but now the DOL has proposed delaying it to July 1, 2019.
Haven’t brokers always had a fiduciary responsibility?
They’ve had to abide only by a suitability standard, unless they have discretion over an account.
I think any person that’s managing someone’s money should have the client’s best interest at heart. It’s kind of intuitive, isn’t it?
When the film “Wolf of Wall Street” came out, you stated on “60 Minutes” that your “goal is one day to pay back all the money. I hope so. No guarantees.” What’s the situation now?
That’s my hope, and I’m working at it. It’s going well. We’ll see what happens. Hopefully, the book will be another big push towards doing that.
So is making money what motivated you to write another?
Nah. The book isn’t a really ultra-lucrative way to make money. It’s not writing books that gets you rich. There are better ways than that. But it can pave the way to other things down the road.
Consulting, taking stakes in companies that you consult with and hoping they go public one day. Stuff like that.
Is the sales system you write about in the book the one you used at Stratton Oakmont?
It is. But now it’s developed, and elegant and ethical. Before I took the system around the world [for doing seminars], I spent a lot of time going through it to make sure that any strategies that lent themselves to being abused or that sent the wrong signals to salespeople were replaced with different strategies that are ethical and, frankly, more powerful because ethics and success are not mutually exclusive.
In the book, you alluded to your past by saying you had “a massive failure” and “lost [your] freedom.” But you didn’t state what happened. Why didn’t you spell it out?
This is meant to be a business book. I wrote two memoirs where I went through that in painstaking detail. There’s a movie out there. If someone wants to find out about that aspect of my life, they can. But this book is to teach people a skill set they can use to live a more empowered life.
Seems that you’re giving away your whole system in the book. Won’t that reduce your online sales and those for your seminars?
I don’t think knowledge needs to be held in. When I first started to speak, I said, “Oh my God, someone put [my seminar] on YouTube! That’s not fair!” But I realized that the more information you have out there, if people like it, the more they’ll learn — and they’ll buy the system.
You write that the secret to charisma in sales presentations is the tonal quality of voice, body language and “not saying stupid s—.” What exactly do you mean by that last part?