Excess, greed, and rivalry.
Those are a few of the great characteristics that have characterised (or plagued) Wall Street for all time.
We’ve put together a list of some of our favourite stories and individuals. Some involving outright crime, some sex and drugs, and others just a lot of lavish spending.
If you've ever seen the film 'The Boiler Room' then you've got a pretty good image of Jordan Belfort.
Author of 'The Wolf of Wall Street,' the former Stratton Oakmont executive helped Steve Madden with his IPO and performed numerous pump and dump schemes via shell companies in order to boost his own earnings. He also laundered money to Switzerland, crashed a helicopter in his backyard, crashed his Mercedes into no less than five cars, and had daily regimen of cocaine and quaaludes before being indicted in 1998 for securities fraud and money laundering.
Today, Belfort claims he is a reformed man. That he no longer has cocaine pulsing through his system. His book is being turned into a major Hollywood film with Martin Scorsese directing it and Leonardo DiCaprio playing the star role of Mr. Belfort himself.
Buffalo wings, marijuana and a truckload of cocaine. This Trinity Place TGI Friday's secretly dealt coke and pot to many bankers on Wall Street who would come in after work to party.
It seems odd that bankers would want to party at a Friday's, until you realise the appeal of being able to order a beer and an eight ball.
Customers would pay cash at the bar and would then receive as much as $200-worth of drugs wrapped in a paper napkin.
The place was shut down in Spring of 2009, leading to the arrest of house dealer/bartender Tony Younge. Rather than risk a repeat business, the owners of the Friday's fired nearly the entire staff and rehired a whole new team. Security has also increased as to lessen the likelihood that someone will try to do this again.
The junk bond king was the epitome of wealth in the 1980s, at one point making over $500 million in one year at Drexel Burnham Lambert. While a modest man who often stayed out of the limelight, Milken was by far one of the richest people on Wall Street, if not the richest for a brief period of time. He used two gigantic X-shaped trading desks in his office to maximise workflow and threw lavish conferences at the Beverly Hills Hotel that he dubbed 'Predators Ball.' His ability to take over companies using a 'highly confident letter' from Drexel earned him a reputation as a serious player in the world of leveraged buyouts.
After banker Ivan Boesky snitched on Milken, the SEC and his subsequent trial ended up draining him of over one billion dollars worth of settlements and fines. Milken's scandal lead to the downfall and eventual closure of Drexel.
What's wild about the whole Milken ordeal is that most people think he was convicted of insider trading when he in fact, was not. Here are the charges against him:
1. Aiding and abetting another person's failure to file an accurate 13d statement with the SEC since the schedule was not amended to reflect an understanding that any loss would be made up.
2. Selling stock without disclosure of an understanding that the purchaser would not lose money.
3. Aiding and abbetting another in filing inaccurate broker-dealer reports with the SEC.
4. Sending confirmation slips through the mail that failed to disclose that a commission was included in the price.
5. Agreeing to sell securities to a customer and to buy those securities back at a real loss to the customer, but with an understanding that he would try to find a future profitable transaction to make up for any losses.
6. One count of conspiracy to commit the other five violations.
Today, Milken runs the Milken Institute, an economic thinktank, and works towards finding a cure for cancer. In a rare tale on Wall Street, Milken is truly the epitome of a reformed broker.
Leeson brought down the world's oldest bank, Barings, via speculative trading back in the early 1990s. It all started with a minor $20,000 loss that Leeson tried to cover up for a fellow employee with a fake holding account, known to him as the 'Five Eights or 88888' account. From there, any screw ups Leeson encountered got thrown into the five eights account. Eventually it snowballed into a $1.4 billion loss.
After hiding over $1.4 billion in losses from SIMEX and Barings Bank, he tried to flee Singapore and ended up getting arrested. Charged with two counts of deceiving the bank's auditors and of cheating the Singapore exchange and expecting extradition to the UK, Leeson was terrified when he heard he would be tried in Singapore. He was found guilty and thrown in a Singaporean jail for five years. As if being stuck in a Singaporean jail weren't bad enough, Leeson contracted colon cancer and his wife left him during his time in prison.
Today, Leeson enjoys his life as a trade show speaker and author. He is also the CEO of Irish football club Galway United. Needless to say, Leeson will never be allowed to work in securities trading for a long, long time. And as he grows older and has grandkids, he'll be able to sit them down and tell them the story of how he single-handedly brought down the world's oldest bank.
Trevor Collenette, a 30-year Lloyds veteran, and three others were caught smuggling $15 million worth of cocaine on a yacht two years ago. He maintains that he has no idea how the coke ended up on the boat. In fact, according to the Evening Standard, he believes he was setup:
The four claimed they were set up after volunteering to sail the 50ft vessel - called the Gin - across the Atlantic from the Caribbean island of St Lucia to the British enclave in the Mediterranean.
They maintain they had no idea the drugs had been hidden in a secret glass fibre compartment on the boat.
John Meriwether thought he had it all figured out when he began his hedge fund Long Term Capital Management. He used the Black-Scholes model to predict market trends and leveraged his firm through the roof. When Russia went bankrupt in 1998 and the Ruble became worthless, a liqudity crisis spread throughout the financial system, which would ultimately destroy LTCM.
Meriwether's fund was no longer a hit. He was losing hundreds of millions of dollars a day and within a month, nearly all of the partners equity, about $4.4 billion worth, had been wiped out. The Federal Reserve decided to hatch a plan to save the fund, fearing a meltdown of the financial system. All of LTCM's creditors were called in and a consortium of the major banks was formed in to help prop up Long Term Capital due to the threat of systemic risk. Essentially, his fund caused a crisis similar to that of the meltdown of 2007-2008.
In the end, LTCM was propped up by nearly $4 billion of liquidity provided by the consortium. LTCM's positions were unwound, the firm was closed, and the Black-Scholes pricing model was no longer a surefire way to make money.
Bernie Madoff needs no introduction. The former NASDAQ head has been scamming people since 1983 through his investment service Bernard Madoff Securities. Madoff would fabricate fake returns, record them, and pay people he was close to. If he needed more money, he would get more people to invest and would raise the amount of cash coming in. Early investors actually benefitted from Bernie's scheme, with some receiving billions of dollars in payouts. Others, however, would lose everything they had, and as it turns out, especially charitiable trusts.
After the incredibly foolish SEC finally caught him in 2009, he was sentenced to prison for life and was forced to give up everything he owned. Losses from his Ponzi scheme are estimated to be around $50 billion mark. Most of the money won't be recovered because it simply doesn't exist. His wife Ruth Madoff was forced to give up a lot of her possesions such as jewelry and houses the two owned together.
But even more appalling is the fact that he let his family run buckwild with the company American Express card:
Madoff's two sons and wife weren't shy about pulling out the company plastic. Son Mark Madoff charged nearly $81,000 in July of 2008, with $77,000 of the expenses coming from charter flights. left a measly 5.6 per cent tip on a $1,066.41 meal at the renowned Per Se restaurant in Manhattan, according to one statement.Andrew Madoff. The size of the expenses varied, from an $8.11 Starbucks charge to wife Ruth's $2,000 purchase at the Giorgio Armani store in Paris.
The spending helped Madoff rack up a whopping 791,814 'Membership Rewards' points as of Dec. 31, 2007. Imagine how many free alarm clocks you could get! To date, more than $534 million has been paid out 1,368 victims affected by Madoff's epic trickery.
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