 | |
| Company type | Brokerage house |
|---|---|
| Industry | Securities |
| Founded | 1989; 37 years ago (1989) |
| Founders | Jordan Belfort Danny Porush |
| Defunct | December 1996; 29 years ago (1996-12) |
| Headquarters | 1979 Marcus Avenue,Lake Success,New York, US |
Area served | United States |
Key people |
|
Number of employees | 1,378 |
Stratton Oakmont, Inc. was an Americanover-the-counterbrokerage house founded in 1989 byJordan Belfort andDanny Porush. The firmdefrauded manyshareholders, leading to the arrest and incarceration of several executives and the closing of the firm in 1996.
Section 230 of theCommunications Decency Act was created in response toStratton Oakmont, Inc. v. Prodigy Services Co..
Jordan Belfort founded Stratton Oakmont in 1989 withDanny Porush and Brian Blake.[1] Earlier, Belfort had opened a franchise of Stratton Securities, a minor leaguebroker-dealer, and then bought out the entire firm.[2] Stratton Oakmont became the largestover-the-counter firm in theUnited States during the late 1980s and 1990s,[3] responsible for theinitial public offering of 35 companies, includingSteve Madden, Ltd.[4] The firm had noproduct control function to verify prices of its positions and monitor trading activity.[5]
Stratton Oakmont participated inpump-and-dump schemes, a form ofmicrocap stock fraud (often under $250-$300 million market cap in today's standards) that involves artificially inflating the price of an ownedstock through false and misleading positive statements to sell the cheaply purchased stock at a higher price. Once the operators of the scheme "dump" their overvalued shares, the price falls and investors lose their money. Stratton Oakmont also tried to maintain stock prices by refusing to accept or process orders to sell stock.[6] In 1995, the firm suedProdigy Services Co. forlibel in a New York court, ina case that had wide legal implications.[7]
The firm was under near-constant scrutiny from theNational Association of Securities Dealers (NASD) from 1989 onward. Finally, in April 1996, the New York District Business Conduct Committee barred Stratton Oakmont from conducting principal retail transactions for a year. Stratton Oakmont appealed to the NASD National Business Conduct Committee. In December, the NBCC expelled Stratton Oakmont from the NASD, putting the firm out of business. Officials called Stratton Oakmont "one of the worst actors" in the securities industry, with a history of "obvious disregard for all rules of fair practice".[8]
In 1999, Belfort and Porush were indicted forsecurities fraud andmoney laundering.[9] They pleaded guilty and admitted that for seven years they operated a scheme in which they manipulated the stock of at least 34 companies.[10] As part of their plea deal, they received less prison time, and cooperated with prosecutors in their investigations of other brokerage houses.[10]
The 2013 filmThe Wolf of Wall Street is a drama based on Belfort's memoirs, directed byMartin Scorsese.Leonardo DiCaprio stars as Belfort[11] andJonah Hill plays Donnie Azoff,[12] a fictional character loosely based onDanny Porush.
40°45′27″N73°41′36″W / 40.75747°N 73.69342°W /40.75747; -73.69342