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NCCS GROUP
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Week 5 - Team Comprehensive Project

The Wolf of Wall Street

Nadina Lynch, Claribel Frias, Cheryl Holmes, & Sondra Allen
Peirce College

Author Note
This paper was prepared for Ethical Leadership – MGT 310, taught by Professor Kristen Irey

Table of Contents Abstract 3 I. DECISION MAKING MODEL 4 II. ETHICAL PRINCIPLES – TENETS 11 III. WHAT SPECIFIC LEADERSHIP AND FOLLOWSHIP ETHICS LESSONS DID YOU TAKE FROM THIS FILM? 14 Reference List 17

Abstract
Jordan Belfort loses his job as a Stockbroker for L.F. Rothschild on Wall Street in 1987 that was caused by the Black Monday. Belfort takes a job in Long Island in a brokerage firm that specialized in penny stock. Belfort managed to make a small fortune due to the high commissions by his bellicose smartness to pitch to buyers, which lead to his discovery to create his only company called Stratton Oakmont. His firms method to “pump and dump” scam made him a fortune which caused his exposure in Forbes. The firm managed to grab the 0attention of the U.S. Securities and Exchange Commission, and the FBI. Jordan makes about $22 million in three hours upon securing the IPO of Steven Madden. Did Jordan Belfort care about that they were doing was wrong? Did they believe they were above the law and get away with inside trading?

I. DECISION MAKING MODEL 1. Determine the fact. Gather all the relevant facts. It is critical at this stage that we do not unintentionally bias our later decision by gathering only those facts in support of one particular outcome. * This movie is based on a true story. * Jordan Belfort is a son of two accountants. * Jordan does enough drugs to sedate the population of New York City. * Jordan’s favorite drug of choice is money. * Jordan started working on Wall Street at the age of 22. * Jordan’s first wife name is Teresa. * Mark Hanna and Peter DeBlasio are Jordan first bosses on Wall Street. * Jordan Belfort receives his broker’s license on Black Monday October 19, 1987. * Black Monday was the day that the stock market crashed all around the world. * Jordan gets a job at Investor Center when his wife Teresa spotted the ad in the newspaper. * Donnie Azoff quits his job after he asks Jordan Belfort how much money he makes and Jordan shows him a paystub of $72,000 from the previous month, Donnie calls his boss and quits. * Donnie Azoff was working at a furniture store before meeting Jordan. * Donnie is married to his cousin whose name is Hildy. * Donnie has two children.

* Jordan and Donnie find a garage to open up a new business for themselves. * Jordan recruits some of his friends and personnel from Investor Center to come work for him. * Jordan tells Brad to sell him back his pen, Brad asks Jordan to write something on the napkin, Jordan states he has nothing to write with and Brad sells Jordan the pen. * The company that is formed is called Stratton Oakmont. * Forbes magazine writes a piece on Jordan Belfort calling him a “sleazy Robin Hood” and thus dubbed him as the “Wolf of Wall Street”. * Jordan’s father Mad Max works for him in keeping his accounts. * Jordan was at first upset about being called the “Wolf on Wall Street” until his wife Teresa stated that at least it was publicity. * Donnie initially tries to stop Jordan from cheating on his wife Teresa with Naomi. * Jordan moves Naomi into his apartment and proposes. * Naomi hires a gay butler who stole $20,000 from his sock drawer. * Jordan has his bachelor party in Los Vegas that cost about $2 million. * Jordan marries Naomi and buys her a yacht, a massive house, and luxurious cars. * Naomi has an Aunt Emma who is British. * This movie is heavy laden with drugs and sex. * The FBI and the SEC both have Jordan under investigation. * Jordan and Donnie both decide they needed to start storing their money overseas to Switzerland. * Aunt Emma and Brad help Jordan to smuggle his money to Switzerland. * Donnie gets Brad locked by being all drugged up when he came to meet Brad with his money. * Jordan’s lawyer tells him his house phone is tapped and that Brad is locked up. * Brad quits doing business in stocks and two years later he dies. * Aunt Emma dies of a heart attack with Jordan’s money in her accounts with her name only. * Jordan tries to get to Switzerland in his yacht and has to be rescue. * Sorel the Swiss banker gets arrested in America and gives up Jordan and his friends. * Jordan was asked to wear a wire to help the government to send his friends to jail. * FBI arrests Jordan at his house for not cooperating and Jordan was sentenced to 36 months. * Naomi takes the children and tells Jordan she is divorcing him. * The real Jordan Belfort is shown in this movie in the last scene.

2. Identify the ethical issues involved. What is the ethical dimension? What is the ethical issue? Often we do not even notice the ethical dilemma. Avoid normative myopia.
The Company Stratton Oakmont would take the penny stocks and put them into a secretive account and then the stockbroker’s would tell their clients to buy these stocks to push the price of the stock to go higher. Once the price goes up Jordan and his friends would sell their shares and make a ton of money on these transactions. Jordan Belfort was taught from the first day his sole purpose on Wall Street is for him to become rich by any means possible. Along with the greed and the corrupt morals there is degradation of humans and heavy drug usage all throughout the movie. The character Donnie Azoff becomes a big liability to Jordan due to the way he down grade and belittle the people around him. The more money Jordan makes the more invincible and untouchable he feels, because of his wealth. “The Wolf of Wall Street” is the description that Forbes magazine characterized Jordan Belfort. 3. Identify stakeholders. Who will be affected by this decision? What are their relationships to me, and what is their power over my decision or results? Who has a stake in the outcome? Do not limit your inquiry only to those stakeholders to who you believe you owe a duty” sometimes a duty arises as a result of the impact to the stakeholders.” For instance, you might not necessarily first consider your competitors as stakeholder; however, once you understand the impact of your decision on those competitors, an ethical duty may arise. * The clients of Stratton Oakmont who were ill advised by the brokers of this company to buy shares in stocks that company was secretly holding. * The employees of Stratton Oakmont who probably were unaware what the company was really doing but became addicted to their lifestyles and ultimately loss their jobs. * Jordan Belfort and his partners who were definitely addicted to their lifestyles and loss all their morals and character. * The wives and children of Jordan and his partners who probably loss their way of living. 4. Consider the available alternatives. Exercise “moral imagination.” Are there creative ways to resolve conflicts? Explore not only the obvious choices, but also those that are less obvious and that require some creative thinking or moral imagination to create. * Jordan Belfort meets different mentors other than Mark Hanna and Peter DeBlasio. * Jordan Belfort does not get his broker’s license. * Jordan sticks to morals and character. * Jordan does not like money as much. * Jordan grows a conscience. * Jordan never meets Donnie. * Jordan never has the taste for the ultra-rich life. * Jordan stays married to his first wife. * Jordan learns to just say “No” to drugs and sex.

5. Consider how a decision affects stakeholders. Take the point of view of other people involved, how is each stakeholder affected by my decision? Compare and weight the alternative: ethical theories and traditions can help here. * If Jordan Belfort had different mentors. * Jordan Belfort did not like money so much. * Stratton and Oakmont actually cared about their clients. * If the employees would question the tactics and antics that was going on at Stratton and Oakmont. * If Jordan never received his broker’s license. * If Jordan would have listened to his father or lawyer. * If Jordan had different kind of partners at Stratton and Oakmont. A. Consequences i. Beneficial and harmful consequences. * Jordan Belfort hard sell to his clients using the “pump and dump” method, gaining about fifty percent of the profit as commission. * Jordan made about $22 million in three hours securing the IPO of Steve Madden. * Jordan made a deal to guarantee Donnie’s arrest by wearing a wire. B. Duties, rights, principles ii. What does the law say? * It is illegal for Insider trading. * It is illegal to short-swing profit. * The Securities and Exchange Act of 1934. iii. Are there professional duties involved? * Jordan knew exactly from a moral perceptive that what he was doing was wrong. * All the employees knew the scams that the firm was involved, but they were in it for the money. iv. Which principles are most obligatory? * Max Belfort “Mad max” should have reported his son Jordan Belfort for all the fraud and scams that he was aware since he was the accountant and knew the legal issues that were being violated. * Jordan Belfort has the obligation to follow any legal laws that he was breaking. v. Are people being treated fairly, with respect for their autonomy and equality? * Employees that Jordan or Donnie felt that were doing what they were supposed to would be embarrassed in front of the whole firm. A. Implications for personal integrity and character vi. What type of person am I becoming through this decision? * Jordan was going to turn Donnie to the FBI by wearing a wire but it warned Donnie with a written note. vii. What are my own principles and purposes? * Donnie felt disappointed with Jordan’s act of betrayal that Donnie gave the note to the FBI that breached his cooperation deal. viii. Can I live with public disclosure of this decision? * Jordan believed that it wasn’t anything that another people would not have done if they had the opportunity. He was being Robin Hood except the riches he kept to himself and shared it with those who helped. II. ETHICAL PRINCIPLES – TENETS
Benjamin Franklin said, “Money has never made man happy, nor will it, there is nothing in its nature to produce happiness. The more of it one has the more one wants” (Warchol, 2014). This is so true. Although, money can help you do things that make you happy such as shopping, going on vacation, eating at fine restaurants – it will not bring you happiness just because you have it.
Ethical principles are the common goals that most people try to achieve. They encompass the good core values that guide and dictate people’s behavior and actions. Core values can help people to know what is right from wrong. Did Jordan Belfort and partners know what they were doing was wrong? Did they care? Were they more concerned with making money and greed then with peoples’ lives? Benjamin Franklin also said, “He that is of the opinion money will do everything may well be suspected of doing everything for money.” (Warchol, 2014). I agree we should not let money control us. 1. Honesty * When Jordan Belfort worked on Wall Street at L.F. he violated this core value. He learned from Senior Stockbrokers tactics of how to “work the system” (be aggressive, fast talking, persuasive, and deceptive to gain investors’ money). * When Jordan Belfort lost his job on Wall Street as a Stockbroker he found a job at a small brokerage firm (the pay was not that good but the commission was great) that sells penny stock. He violated this core value at this job also. He used the tactics he learned on Wall Street to attract investors. He was misleading and lied to potential investors in order to get them to purchase the cheap stock at a higher price so that he could make a great commission. * Jordan Belfort opens his own business (Stratton Oakmont) with his business partner Donnie Azoff and other friends. They all violated this core value. They were not straightforward with their investors who purchased stock from their company. They were misleading and gave false statements about stock. 2. Integrity * Jordan Belfort and Donnie Azoff violated this core value. They were not truthful about the rate of return of investments. They sold stock at higher price than what it was worth. They were not truthful to their employees, they led them to believe that the tactics the use to gain investors was the proper way. They were not truthful to their families, they engaged in drugs illegal activities in order to get rich and live a lavish lifestyle. 3. Fidelity * Jordan Belfort and Donnie Azoff violated this core value. They were not loyal or uphold their marriage vows. They committed adultery by engaging in sexual escapades with prostitutes. They also committed crimes such as money laundering, secretly selling shares to themselves during the Initial public offering (IPO) with Steve Madden. 4. Respect for others * Jordan Belfort and Donnie Azoff violated this core value. They were not sincere in their actions with investors. They used power and the knowledge of the stock market system to manipulate people. They were not concerned with the repercussions others would face when they agreed to the investments they thought would make them money, but ultimately resulted in the loss their of money. They destroyed families’ futures. 5. Responsible Citizenship * Jordan Belfort and Donnie Azoff violated this core value. They thought they were untouchable. They frequently engaged in drugs, alcohol, and corruption. They committed crimes and illegal actions in their company. The company’s mission was to gain money by any means necessary. They hid their money in off shore accounts. They tried to bribe a FBI agent who was investigating the company. They destroyed documents. They did not practice good ethics and they put everyone in the company in jeopardy. 6. Pursuit of Excellence * Jordan Belfort and Donnie Azoff violated this core value. Their focus was to get rich and have more money than they could spend. They used manipulation and deceit to get it.

7. Accountability * Jordan Belfort realizes that he needs to get it together and become a better person because there is too many signs coming his way that his world is about to crash down on him (such as: FBI investigating him, one of his partners got arrested, family member who is holding the money in an account under name dies, and when he goes to visit the bank his boat is destroyed in a storm, and the plan that comes to rescue him blows up). * Jordan Belfort decides to confess his crimes to the FBI agent who has come to arrest him on a crime unrelated to the ongoing investigation. Jordan Belfort agrees to wear a wire to his office so that he could incriminate his partners as well. Jordan Belfort agrees to do this so that he could spend less time in jail. * After sometime in jail, Jordan Belfort shares in knowledge and sales techniques with the public by becoming a public speaker and hosting seminars. III. WHAT SPECIFIC LEADERSHIP AND FOLLOWSHIP ETHICS LESSONS DID YOU TAKE FROM THIS FILM? 1. Followership – Belfort learned all the worst tactics to use on clients from his first mentor Mark Hanna. His first stockbroker job was at one of the best firms, until it crashed and closed. That left Belfort with no job he decided to answer an advertisement to be a penny stock-broker. Jordan Belfort started the company Stratton Oakmont, which he was the primary leader. Belfort decided to start his company by working for a penny stockbroker company located in Long Island. There is the beginning of the Wolf on Wall Street. He recruited his shadowy friends, and taught them how to sell penny stock. This group definitely followed Belford. 2. Abuse of Power –Jordan Belfort demonstrated the true meaning of abuse of power in this film. Once he figured out that money meant power it went straight to his head. Besides abusing his power Belfort abused drugs, alcohol, women, sex anything he wanted to do. Remember at the age of 26 he had 49 million dollars that allowed him to abuse his power. By abusing his power he started cheating people who didn’t have the money to buy the stocks. In the film he went as far as to think he could bribe the FBI agent by inviting him to his yacht to find out what they had on him. Belfort was testing how far his power went, but it blow up in his face. 3. Moral Decision Making –Morals are the motives that lie behind behavior based upon an individual’s concept of what is right and what is wrong. Jordan Belfort did not know what that meant. In the beginning of the movie, Belfort is happily married trying to create a better lifestyle for them. It shows that when Belfort adopted Mark Hanna’s method that changed his life for the worst as far as how to treat others. Belfort came from the suburbs with his family life. Mark Hanna was city living, a rich broker who was rewarded for being an alcoholic, drug abusing, womanizer. Mark Hanna displayed that a leader was rewarded for being deviant, which led Jordan Belfort to making his decisions after he met Mark Hanna.

4. Altruism –Jordan Belfort at some point in his life believed that he was helping people by helping them get what they want. Especially, the stockbrokers that worked for Stratton Oakmont to reach a level he wanted for himself and his friends. Hi stockbrokers went from being poor to becoming very wealthy. The company was lying about what they were doing to their clients’ investments. The SEC was protecting the stockholders interest. 5. Greed –Jordan Belfort appears to not care about anything but having money. Money is his motivation to continue his habits of having drugs, sex, women just about anything he felt he wanted or needed. He became so greedy his first wife tried to tell him that it wasn’t right to take people’s money the way he was doing it. The greed consumed his entire life. It caused Belfort to lose everything. 6. Cross Cultural Leadership –There is a cultural message that this movie pointed out, that because of money many people got hurt, and still trying to recuperate. Belfort crossed over cultural barriers by being poor to becoming very wealthy.

Reference List
Hartman, L. P., DesJardins, J., & Macdonald, C. (2014). Business Ethics Decision Making for Personal Integrity & Social Responsibility. New York: McGraw-Hill/Irwin.
Scorsese, M. (Director). (2013). The Wolf of Wall Street [Motion Picture].
Warchol, D. (2014, May 15). 14 Money Lessons from Benjamin Franklin. Saving Advisor, p. 1.