Takes One to Know One: ‘Wolf of Wall Street’ Jordan Belfort Tells CNN There’s ‘Illegal’ Activity Involved With GameStop Chaos

 

Jordan Belfort, the former stockbroker who spent 22 months in prison for stock-market manipulation and running a boiler room as part of a penny-stock scam, was on CNN on Thursday to share his thoughts about the Reddit-organized GameStop stock trading.

Belfort, who was portrayed by Leonardo DiCaprio in the movie based on his book, The Wolf of Wall Street, was blunt in his comments to CNN’s Brooke Baldwin, stating that he believed there was in fact illegal activity happening related to the trades.

Baldwin asked Belfort for his take on the situation, and he reflected back on when he was trading in the 1990s before the ubiquity of the internet, saying there was a similar dynamic battle between “the shorts against the longs, and usually the shorts were right…every once in a while they get it wrong, but usually they’ve done deep research.”

“It’s shocking to me that a bunch of individual investors could muster enough buying power to do this,” Belfort continued, “but it just shows the power of the internet and forums like Reddit.”

The problem, Belfort noted, was how the Redditors had organized — did it rise to the level of illegal collusion?

“There’s a very fine line between collusion and trading,” said Belfort. “If you wanted to understand why the platforms are shutting this down, I believe it’s not so much that they’re on the side of big business or big hedge funds — they have massive liability on their side.”

“When this is over,” he continued, “and it will end, and all these stocks come crashing back down to their fundamental values, there are going to be lawsuits flying,” and the platforms like Robinhood, Ameritrade, etc. that had restricted trading this week, would find themselves named as defendants.

Baldwin asked him about the Reddit investors’ defense, reading from a statement by the WallStreetBets subreddit’s administrator, which Belfort dismissed as “laughable,” noting that they had managed to get together a class action lawsuit already, but also added that he was sympathetic to the idea of the small investors fighting back against Wall Street.

“That’s where the outrage comes from, because Wall Street rips off America all the time,” he said.

“Do you think anything illegal is happening here?” Baldwin asked him directly.

“Yes, I do,” Belfort replied, but also said that he thought that many of the investors were just “jumping on” and had no idea or intention that what they were doing was illegal, and now risked getting swept up if the government sought strict enforcement of arcane and complicated securities regulations.

Belfort also gave some advice to the Redditors, saying that that despite the legal issues they should “keep doing it,” but use more discretion picking stocks, picking undervalued companies instead of just targeting hedge funds’ shorts “out of spite.”

Watch the video above, via CNN.

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