Many have complained, myself included, that the movie “Wolf of Wall Street” failed to show the devastation suffered by those who were victimized by Jordan Belfort and his company Stratton Oakmont. Clearly, this movie was produced purely for its entertainment value, not as a documentary or exposé about the evils of the brokerage industry. Nevertheless, the movie may have opened the eyes of some investors to the fact that stockbrokers don’t always have their customer’s best interest in mind.
As a public service for all of those who didn’t see the movie (and those like the elderly couple in the row ahead of me who left the movie early because of all the debauchery being depicted), I am posting actual copies of scripts used by Stratton Oakmont brokers that I’ve culled from my legal files. My goal is to educate investors about high pressure tactics such as those used by Stratton Oakmont brokers. As illustrated in the scripts below, customers are typically pressured into making a decision immediately over the phone without the benefit of any research or financial data. A common ploy is to get the customer to invest a relatively small amount in a widely known company. Once a relationship is started, the broker will invariably urge the customer to make much larger investments in even riskier securities.
***We disclaim any responsibility for the information contained in the scripts quoted below***
. . . . We’re not a Merrill Lynch or Shearson Lehman, we choose not to be. If we wanted to do a TV commercial, we could. But here at Stratton, our reputation is by word of mouth. We don’t require you to purchase 2,000 or 3,000 shares to do business like a major wirehouse would. We don’t need to work large, we’re willing to work small at the start of a relationship because we know we’re right.
My philosophy is to work small, hit a base hit, come back with another idea, hit another base hit, and then another. After I’ve shown you winner after winner, after winner, and the bases are loaded, you’re going to want to step up to the plate and swing for the grand slam.
Give me one shot, let me start the relationship with a base hit. Do this. Open an account for 100 shares, it’s just a matter of some basic information.
. . . . Now [ client’s name ], my point to you is this, I can tell you all about Jaguar, Telephone De Mexico and Glaxo, how they traded from the London to the NYSE and dozens of other companies once they got listed, how investors made a fortune. But I’m not going to talk about the market value, the assets of Nestles, the profit margins and the P.E. ratios, because we’ll be here all day.
The bottom line is this, what I have been doing for all of my clients A-Z. And hear me out. Is positioning them with large blocks of 5-10,000 shares of Nestles in an attempt to get them involved before Nestles gets its listing on the NYSE because once you read about this in the Wall Street Journal, IT’S TOO LATE! Do you follow me.
Now obviously [ name ], I haven’t made you a dime yet, you don’t know me from Adam and we don’t even have the luxury of a track record together. So, I wouldn’t ask you to take down a large block of Nestles like our other clients are doing.
What I propose is this, and please hear me out. Pick up a very small block of 500 shares. It’s a cash investment of _____, going into the largest food company in the world. Your funds are not due today or tomorrow, their due in a week. You’ve probably done this before. First, you’ll receive a standard confirmation from my bank clearing agent, Adler Coleman. You probably heard of them.
. . . . The key to making money in the stock market is to buy into weakness and to sell into strength.
Do you remember Union Carbide when their plant exploded in India; killing over 250,000? India sued Union Carbide for over 3 billion in damages. The stock dropped from $50 a share down to $18–sat there for over a year.
Our analyst——–is fat, bald, and dresses like @#$%&!, but he is one of the most astute minds on Wall Street.
He told us to buy Union Carbide between 18 and 21–the litigation will be settled and the fundamentals of the company dictate much higher prices.
6 months ago, I began buying the stock between 18 and 21 in anticipation of a settlement. 3 months ago they settled. The first day the stock was up 5 dollars–the next day up 6 dollars. We had a 60% return virtually overnight. I saw it happen with Texaco. I was a sheep and was scared to buy; when the stock ran to $50 I kicked myself in the @#$%.
The same thing with RJR. I only bought a touch and, when it traded from 25 to 106, I almost died.
But you know something, I got rich on Union Carbide and there is no way I’m letting you miss Kodak. Once litigation is settled were looking for at least 75 dollars a share.
“SEND ME INFO.”
. . . . Receiving and reading it in 3 days is not going to make you money. “Working with my timing will.” There is no one that knows this stock better than me. I look for fundamentally sound companies that I can combine with a near term event, in this case litigation.
I’m hearing people all over Wall Street speaking about Kodak in terms that I haven’t heard in years. It’s the strongest story in months. The decision to buy Kodak has been made, not just by me, but by some of the top analysts at Shearson Lehman, Merrill Lynch, Kidder Peabody and Bear Stearns.
“ASK MY WIFE”
. . . . I bet you make $10-20,000 dollar business decisions every day. I’m sure you didn’t get to where you are today by consulting with your wife on everyday decisions.
“LET ME CHECK IT OUT”
. . . . This is Eastman Kodak, we have access to the best and most current information. I can show you a view of the market you will not have seen before unless you were here. We’re bringing you opportunity, not history and I’m concerned because you must realize you can’t check out the kind of advice I’m giving you–performance speaks–I want to show you results.