With that, the rest of 1993 passed without incident—which is to say that Lifestyles of the Rich and Dysfunctionalcontinued unabated—and came to a bountiful close with the public offering of Steve Madden Shoes. The stock had leveled off at just over $8, and between my ratholes, bridge units, and proprietary trading commissions I had made over $20 million.
Over Christmas and New Year’s, we took a two-week vacation in the Caribbean aboard the yacht Nadine. The Duchess and I partied like rock stars, and I had managed to fall asleep in just about every five-star restaurant between St. Bart’s and St. Martin. I also managed to spear myself while scuba diving on Quaaludes, but it was only a flesh wound, and other than that I had made it through the trip mostly unscathed.
But vacation was over, and it was back to business now. It was a Tuesday, the first week in January, and I was sitting in the office of Ira Lee Sorkin, Stratton Oakmont’s gray-haired, mop-topped chief outside legal counsel. Like all prominent white-collar attorneys, Ike had once worked for the bad guys—or the good guys, depending on whom you asked, which is to say that Ike had once been a regulator. In his case, he had been Section Chief of the SEC’s New York Regional Office.
At this particular moment he was leaning back in his fabulous black-leather throne, with his palms up in the air, saying, “You should be jumping for joy right now, Jordan! Two years ago the SEC sued you for twenty-two million bucks and was trying to shut down the firm; now they’re willing to settle for three million bucks and let the firm off with a slap on the wrist. It’s a complete victory. Nothing less.”
I smiled dutifully at my blowhard of a lawyer, although deep down I felt conflicted. It was an awful lot to take in my first day back from Christmas vacation. I mean, why should I be so quick to settle, when the SEC hadn’t found even one smoking gun against me? They had filed their suit more than two years ago, alleging stock manipulation and high-pressure sales tactics. But they had little evidence to support those claims, especially the stock manipulation, which was the more serious of the two.
The SEC had subpoenaed fourteen Strattonites, twelve of whom had placed their right hands on a stack of bibles and lied right through their teeth. Only two Strattonites had panicked and actually told the truth—admitting to using high-pressure sales tactics and such. And as a way of saying, “Thank you for your honesty!” the SEC had tossed them out of the securities industry. (After all, they had admitted wrongdoing under oath.) And what terrible fate had befallen the twelve who’d lied? Ah, such poetic justice! Every last one of them had walked away completely unscathed and was still working at Stratton Oakmont to this very day—smiling and dialing and ripping their clients’ eyeballs out.
Still, in spite of my wonderful string of successes at fending off the bozos, Ira Lee Sorkin, a former bozo himself, was still recommending that I settle my case and put all this behind me. But I found myself struggling with his logic, inasmuch as “putting all this behind me” didn’t just mean paying a $3 million fine and agreeing not to violate any more securities laws in the future; it also meant that I would have to accept a lifetime bar from the securities industry and leave Stratton Oakmont forever—with some additional language, I was certain, that if I were to somehow die and then figure out a way to resurrect myself, I would still be barred.
I was about to offer up my two cents when Sorkin the Great could remain silent no longer. “The long and short of it, Jordan, is that you and I made an excellent team, and we beat the SEC at their own game.” He nodded at the wisdom of his own words. “We wore the bastards out. The three million you can make back in a month, and it’s even tax-deductible. So it’s time to move on with your life. It’s time to walk off into the sunset and enjoy your wife and daughter.” And with that, Sorkin the Great smiled an enormous boiling smile and nodded some more.
I smiled noncommittally. “Do Danny or Kenny’s lawyers know about this?”
He flashed me a conspirator’s smile. “This is strictly on the Q.T., Jordan; none of the other lawyers knows anything. Legally, of course, I represent Stratton, so my loyalty is to the firm. But right now you arethe firm, so my loyalty is to you. Anyway, I figured that given the circumstances of the offer, you might want a few days to think it over. But that’s all we have, my friend, a few days. Maybe a week at most.”
When we were first sued, we had each retained separate legal counsel to avoid potential conflicts. At the time I had considered it a serious waste of money; now I was glad we had. I shrugged my shoulders and said, “I’m sure their offer isn’t going away anytime soon, Ike. Like you said, we wore them out. In fact, I don’t think there’s anyone left at the SEC who even knows anything about my case.” I was tempted to explain to him why I was so certain of that (my bug in the conference room), but I decided not to.
Ike the Spike threw his hands in the air and rolled his eyes up in his head. “Why do you wanna look a gift horse in the mouth, huh? The SEC’s New York office has had huge turnover in the last six months, and morale is low. But that’s only by coincidence, and it won’t last forever. I’m talking to you like a friend now, Jordan, not your lawyer. You gotta settle this case once and for all, before a new set of investigators steps in and takes another crack at it. Eventually one of them might find something; then all bets are off.”
I nodded slowly and said, “It was smart of you to keep this between us. If news leaks out before I have a chance to address the troops, they might panic. But I’ll tell you that the thought of taking a lifetime bar doesn’t exactly thrill me, Ike. I mean— to never set foot in the boardroom again!I don’t even know what to say about that. That boardroom is my lifeblood. It’s my sanity, and it’s also my insanity. It’s like the good, the bad, and the ugly all rolled up into one.
“Anyway, the real problem isn’t gonna be with me; it’s gonna be with Kenny. How am I gonna convince him to take a lifetime bar when Danny’s staying behind? Kenny listens to me, but I’m not sure he’ll listen if I tell him to walk away while Danny’s allowed to stay. Kenny’s making ten million dollars a year; he may not be the sharpest tool in the shed, but he’s still smart enough to know that he’s never gonna make this kinda money again.”
Ike shrugged and said, “So let Kenny stay behind and have Danny take the bar. The SEC couldn’t care less which of them stays and which of them goes. As long as you’regone, they’re happy. All they want is to make a nice fat press release saying the Wolf of Wall Street is out of their hair, and then they’ll be at peace. Would it be easier to convince Danny to leave?”
“That’s not an option, Ike. Kenny’s a fucking moron. Don’t get me wrong, I love the guy and everything, but that doesn’t change the fact that he’s incapable of running the firm. Tell me how this would play out if we agreed to settle.”
Ike paused, as if to gather his thoughts. After a few seconds he said, “Assuming you can convince Kenny, then both of you would sell your stock to Danny and then sign court orders permanently barring you from the brokerage business. The money for your fines can come directly out of the firm, so you won’t have to take a dime out of your pocket. They’ll want an independent auditor to come down to the firm and do a review and then make some recommendations. But that’ll be no big deal; I can handle that with your compliance department. And that’s it, my friend. It’s very straightforward.”
Ike added, “But I think you’re putting too much stock in Danny. He’s definitely sharper than Kenny, but he’s stoned half the time. I know you enjoy your partying too, but you’re always in good shape during business hours. Besides, for better or worse, there’s only one Jordan Belfort in the world. And the regulators know that too—especially Marty Kupperberg, who’s running the New York office right now. That’s why he wants you out. He might despise everything you stand for, but he still respects what you’ve accomplished. In fact, I’ll tell you a funny story: A couple of months ago, I was down at an SEC conference in Florida, and Richard Walker—who’s the number-two man down in Washington right now—was saying that they need a whole new set of securities laws to deal with someone like Jordan Belfort. It got quite a chuckle from the audience, and he really hadn’t said it in that derogatory a fashion, if you know what I mean.”