My Fight With The Wolf Of Wall Street & How I Made $100k+ Today

What a wild start to 2014 its been — thanks to my top trading challenge student Tim G passing $1 million in trading profits after starting with just $1,500 of his own money 3 years ago and doing tons of press HERE and HERE, not to mention that he’s my second millionaire student, see my first student to cross $1 million HERE) and the stock market being on fire so that I’m now up 40% in the first 40 days of the New Year, my team and I are OVERWHELMED with people joining my newsletters HERE.

EVERYONE wants me to make a video like this about them:

And so they should because taking a few grand and turning it into seven figures in a few years is not just a dream anymore, it’s reality.

So now that I have 2 millionaire students is there a lot of pressure to deliver a third?

Am I nervous?

Heck no!

I show everyone how I’ve been making six figures year in year out since my high school days with very little change to the patterns…I now have 1,400+ video lessons and over a dozen DVDs so my trading challenge students have a solid curriculum to get started digging through from day 1.

I’ve been waiting years for people to realize everything I teach is 100% real; ever since I turned a few thousand dollars into $1.65 million in 4 years, and people who haven’t watched my free video lesson series HERE began thinking it was due to luck.

Here are 3 case studies of how to turn a few thousand into a few million and here’s a post on how one of my students made $118,310 last week on a pattern I previously wrote about HERE and have tons of live trades HERE and HERE

And it’s that same pattern from which I made $100,000+ this morning — and it might even go up to $150,000 by the time I lock it in when the stock reopens in 2 weeks…watch this video explaining it all:


You see I was betting against, aka short selling, a blatant penny stock pump I was expecting to crash given the chart pattern and my experience so I bet big…

And lo and behold the SEC halted the stock — meaning they stop trading in the stock while they do an investigation of the company — which is best case scenario for me as I’m short $200,000ish worth of stock and will make $100-$150k when the stock reopens down probably 50-75% due to the investigation and the inability of promoters to do the same old promotions anymore now that they’re on the regulators radar.

Insiders and promoters selling junk stock to hapless idiots is all fun and games until the regulators come in and ruin the party for them by threatening fines and jail time.

I know, I know short selling penny stocks sounds crazy and complicated so read HERE and HERE and HERE how I’ve been shorting these kinds of “companies” for years and usually I beat the SEC by months or years before they catch on and halt the stock so I’m glad they’re catching up!

I know, I know penny stocks and short selling and day trading are all such dangerous words in the eyes of traditional investors, but as I create more millionaire students, people everywhere will eventually realize some of the best risk-adjusted returns in the entire stock market come from betting against blatant pumps that have risen exponentially due to unethical and often illegal promotion.

It’s the same thing as buying low and selling high, just in the reverse chronological order! I sell high FIRST with the goal of buying back low LATER.

The beautiful thing is that contrary to guessing where real companies like Google and Facebook will be in a month

Don’t get it?

Welcome to my why my educational business is booming and people want my DVDs HERE baaaaadly.

I’ve been refining my trading strategy and rules for over 14 years now and my trading challenge students are reaping all the benefits…

…and career criminals like Jordan Belfort “The Wolf Of Wall Street” are my sworn enemies as they are the ones who lie and cheat and create these penny stock pumps and promote them to unsuspecting people who lose 50-75-99% of their hard earned money.

I previously wrote HERE about how Jordan Belfort was quick to point out that nobody lost their entire life savings…just the majority of it…which is the single worst rationalization I’ve ever heard.

More importantly, I exposed how Belfort isn’t giving any of his booing DVD/seminar business to his victims since he considers that part of his new life and not his old life which are the book/movie profits.

As I explained the DVD/seminar profits is exponentially larger than the book/DVD profits as I should know because I’m the legal, ethical, successful, real version of Jordan and thanks to the New York Post for printing this story helping me spread the word about this scumbag.

In the article entitled “Is ‘Wolf of Wall Street’ trying to avoid victim payments?” I’m quoted as saying:

While Belfort denies he is hiding money from the government, financial experts aren’t so sure. Stock trader Timothy Sykes, a millionaire penny stock expert, tells us, “I estimate he has made around $4 million in the last year. I want to see an aggressive investigation into this guy’s earnings. He has a new life, living at the beach in California, flying first-class to Australia . . . But his victims are still hurting. I believe he is going around the world earning millions and not giving any of it to his victims.”

Some people have asked how I know he flew first class to Australia — its because he posted this picture on his Instagram, just before watching the Australian Open Women’s Final front row (pricey seats right?) even though he still owes nearly $100 million to his victims:

wolf 3 copy

And he gave an interview to New York magazine from his pimp California beachhouse:

beach

I bet he was very happy with that picture making him look like he’s busy and in demand, but what you need to know is that Jordan Belfort is not the master salesman the movie pitched him as — he’s a master thief.

Allow me to explain…

As I exposed HERE in this followup blog post he calls himself “The Millionaire Maker”, but his testimonial page only has 2 people listed and NOBODY has gone on the record saying Jordan Belfort made them a millionaire from scratch…he only got some of his boiler room brokers rich a few decades ago by teaching them how to con ordinary people and then ratting those salesman out for reduced jail time.

Some people have said I sound jealous — I don’t care if Belfort had made $1 billion or $10 billion, I would NEVER be jealous of someone who made even one dollar in a dishonest fashion that hurts their customers, and worse, destroys their lives.

I’m FAR more interested in justice and exposing scumbags like this as they will continue hurting people again and again and again if left unchecked.

Can you imagine ANY of Jordan Belfort’s customers having their life told in a video like this:

If they had made video montages like that, his customers would start out as regular people and then by the end, having lost half or most of their savings, be very bitter. Some have even committed suicide or died due to the devastating financial losses and realization of how truly ugly crooks like Belfort can be.

This brings me to my point — for those who think Belfort is a “master” salesman, please read this great but sadly ignored article in the Wall Street Journal detailing how Belfort and his crew meticulously scammed their customers, written by the criminal prosecutor who put together the case against Jordan Belfort.

Unlike the movie characterization, Belfort’s success wasn’t due to any great sales tactics, it was due to an extraordinarily devious and fully illegal con job designed to …please help me spread this truth before Belfort lures in more people by claiming he’s a great salesman:

The Scorsese movie glosses over the nuts and bolts of how Jordan and his merry men bilked seemingly hapless suckers out of their life savings en route to the more entertaining sex, drugs and partying that his crimes financed. Today, in the era of Occupy Wall Street protests and seemingly daily multimillion-dollar regulatory fines against financial firms, it is tempting to view Jordan Belfort as emblematic of Wall Street’s greed. In fact, he was nothing more than a thief who found a way to steal from anyone who trusted him and to blame it on the stock market.

Stratton Oakmont was not a real Wall Street firm, either literally or figuratively. Its offices were in Long Island, and it bore little resemblance to even the most no-holds-barred investment house, Bear Stearns, where I once worked. Furthermore, my experiences as a criminal prosecutor, at the SEC, and more recently at the Consumer Financial Protection Bureau, have taught me that every business, especially those involving large sums of money, attracts criminals. For example, after the real-estate market collapsed in 2008, scammers began peddling worthless loan-modification products to impoverished homeowners facing foreclosure. Such predators were no more characteristic of the mortgage industry than Jordan Belfort was of Wall Street.

Belfort and his accomplices fine-tuned his signature fraud through dozens of repetitions. Here’s how it worked, in five easy steps:

1. Create IPO Stock: The first thing Stratton Oakmont needed was a business to sell, and the definition of “business” was very flexible. A judo school, a bagel maker, a newfangled water purifier, or a recovering alcoholic selling shoes out of the trunk of his car would do. What was needed was not so much an actual business as a business entity with a story that could be converted into publicly traded shares of stock through a Stratton initial public offering.

An important element of the scheme was that the Stratton IPO stock was not really sold to the public—it was sold to Stratton. Securities laws forbid underwriters like Stratton from buying more than a small percentage of the IPO stock they issue. To avoid this roadblock, Stratton sold all of its IPO stock to friends (nicknamed “flippers”) like Madden, who immediately sold the stock back to Stratton for a small profit. The IPO stock was usually issued to the flippers at $4 per share, and then sold back to Stratton for $4.25 per share. This was a pretty nice deal for the flippers, who could pocket $50,000 or so from an IPO without breaking a sweat or risking a loss.

2. Line Up the Victims: Suckers aren’t born, they’re trained. Stratton Oakmont’s salesmen would first gain the confidence of investors by letting them make a small profit on one or two Stratton IPOs. Once trust had been established, the Stratton salesmen would inform these customers that a really hot IPO was coming soon with a $4 issue price. Like all Stratton IPOs, the stock’s price was expected to take off when it began trading in the aftermarket. An excited customer with $100,000 of savings might authorize the Stratton salesman to buy 25,000 shares of the IPO stock, and then transfer the $100,000 to his Stratton account. By totaling up all such commitments, Jordan Belfort knew exactly how much buying power Stratton’s customers had.

3. Bait and Switch: Shortly before an IPO, the Stratton salesmen would call these customers and inform them that the IPO was so hot that the salesmen could offer only a (very) few shares at the $4 IPO price. However, the salesmen could create purchase orders to be executed as soon as the stock began trading on the open market. Many customers assumed that such orders would result in stock purchases near the $4 issue price, so they simply agreed. Some balked at giving the salesmen permission to invest their money without knowing the purchase price, or simply refused to buy stock in the aftermarket.

This was when the boiler-room hard sell depicted on screen began. The pressure on customers could be overwhelming, especially since they had already agreed to buy the same stock at the issue price: “What do you mean you don’t have the money to invest in this stock? You already gave me $100,000 to buy it at $4 per share!” “I made money for you before, and now you don’t trust me?” “I’m never going to let you in on another IPO if you back out on me now!”

The Stratton brokers could have just placed orders in these customers’ accounts without their permission, but they rarely did. Unauthorized orders were more likely to trigger complaints to regulators, and the move would have violated some unofficial boiler-room code of honor. These guys took pride in their ability to talk suckers into parting with their life savings.

4. Market Manipulation: Stratton Oakmont could have made millions of dollars just by selling its customers stock in nearly worthless companies for $4 per share, but after a couple of such IPOs, investors and regulators would have caught on. Instead, Jordan Belfort used the stock market to camouflage his theft.

Let’s say that one million shares of the IPO stock had been issued, and Stratton’s customers had committed to buying $12 million of the stock in the aftermarket. Belfort would therefore want the stock price to rise from $4 to $12 per share before selling it to them. Having bought all of the IPO stock back from the flippers, Belfort and Porush could make the stock trade in the aftermarket at any price. The simplest way to do so was to buy and sell shares between Stratton accounts at increasing prices, but that would have been too obvious. The same result could be accomplished by having friends buy small amounts of stock using “market orders,” which buy shares at the lowest price offered from any seller. The only seller was Stratton Oakmont.

As soon as aftermarket trading commenced on IPO day, the friends of Belfort and Porush started placing these small market orders. Stratton would simultaneously sell its stock using “limit orders,” which offer stock for sale only above a specified minimum price. After each sale, Stratton would place another (sell) limit order with a slightly increased minimum price, and the friends’ market orders would execute at each higher price.

What the market recorded was a steady progression of trades at $4.25, $4.50, $4.75, all the way up to the $12 target price. The run-up from $4 to $12 could be accomplished in minutes. This was a common first-day trading pattern for legitimate hot IPO stocks during the 1990s, so the manipulation wasn’t obvious.

5. Sell High and Shut the Door: When the IPO stock price hit the $12 target, Stratton executed its customers’ buy orders. This was the payoff moment when Stratton got the victims’ money and the movie’s over-the-top partying began.

Had customers holding the inflated stock tried to resell it quickly on the market, they would have found almost no real buyers, and the stock price would have plummeted about as quickly as it had risen. Such an early price crash was rare for legitimate IPO stocks and would have attracted regulatory scrutiny and scared away future Stratton victims. So Stratton made a practice of supporting the high price for a while—usually about a month—by buying any of its IPO stock offered for sale on the market.

But letting customers sell their stock for $12 while Stratton Oakmont was the main buyer would defeat the entire purpose of the scheme; the victims had to be discouraged from selling too soon. Stratton brokers could usually do so by heaping more hyperbole onto investors who called to place sell orders. (Stratton operated before Internet self-service brokers like E*Trade ETFC +1.99% enabled most investors to place their own orders).

When customers couldn’t be talked into holding on to their stock, their sell orders would usually just be lost and their phone calls ignored. When the sell orders were finally executed, there would be few buyers, the stock would crash, and the customers would be wiped out. By that time Belfort had the next IPO ready and was lining up new lambs for the slaughter.

Would this boiler-room fraud work today? The simple answer is no, so long as the Securities and Exchange Commission and the Financial Industry Regulatory Authority (Finra) did their jobs, but the same was true in Stratton Oakmont’s time. Regulators are now armed with more powerful computers and years of exposure to the scheme. But creative con artists are always inventing new variations on old scams, and regulators are much better at preventing yesterday’s crimes than anticipating tomorrow’s. Jordan Belfort told me that he never worried about the SEC, and only occasionally the FBI. When I inquired about the National Association of Securities Dealers, (Finra’s predecessor), he laughed.

I once asked Jordan if it bothered him that he was stealing old ladies’ life savings. Without missing a beat, he replied: “Of course. Why do you think we took all of those drugs?” It was my turn to laugh. Maybe we’ll see that remorse in the deleted scenes on “The Wolf of Wall Street” DVD.

Mr. Rubin is a partner at Hunton & Williams LLP.

Posted in Celebrities, Penny Stock Promoters, Penny Stock Psychos, Penny Stock Scandals, Wall Street Movies

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  • patrick

    Tim,

    I’ve got a hold of Jordan Belmont’s $1,000 course and I think you might like some juicy stuff that’s on there that swings the door pretty open about his scamming ways. How can I reach you?

  • http://www.timothysykes.com timothysykes
  • KYKNOC

    I mostly knew about the nuts and bolts.. but now I have a much clearer picture.. I imagine their is still 20-30 Belmonts out their with boiler rooms.. Its Thievery… But not nearly as bad as the theives in the banking families.. they destroy countries, create wars and a perpetual system of debt… Their Networth is 100 times that of belmont.. I started looking at the otc markets a few weeks ago, and If you need a true third student.. IM RIGHT FUCKING HERE! I will warn you my dedication is ridiculous.. My neural network is strengthening and Im really starting to step into my shoes.. My Life is Occillating and MASTERY OF THE STOCKMARKET is only the beginning..
    CALL ME PERSONALLY IF YOU DOUBT ME 2067472705

  • keysmank

    Tim the “white shoe” firms were doing the same thing. I know because I was on the Street at the same time as Jordan. He was a “piker” compared to the “thievery” going on at these firms. The difference is they had the pedigree,fraternities,alumni,rolodex and connections of the upper class, while Jordan was a “meatball” like most of us.

  • lenster

    My buddy taught his kids tennis. Had to hound him for months for 300 bucks. He finally gets an envelope of twenty’s handed to him. Total? $280.00.

  • Tony

    Tim – I’m a fan of your work and put faith in your practices. The only issue I take is with the claims that Tim Grittani started out with $1500 of his “own money”. Not disclosing that he also had $10k in funds from other resources to begin his journey to your student millionaire is leaving out very important key factor. If I start out with $50 of my “own money” but borrow $50k from my family to build my penny stock portfolio to a million dollars, while that is still an amazing return, it certainly isn’t completely honest that I tell people I made a million dollars with “my own” $50. As I said, I’m a fan, but I’m really surprised that your haters haven’t jumped all over the lack of full disclosure of Tim’s true starting funds to discredit your work.

  • http://www.timothysykes.com timothysykes

    Probly because even my haters have watched http://tim.ly/tgmont and see that I don’t hide this # at all…I can’t control the press headlines and to be fair Tim Grittani never used more than $1500 of his own money when he started…to be fairer who the fuck cares what he started with…I started with $12k, http://profit.ly/user/azh started with $2200 and has grown it into $150k in a year…try to discredit me, see where it gets you when I have student after student accomplishing the seemingly unthinkable

  • Sean K

    Good stuff Tim, keep up the good work.

  • Bruce

    Tim, you are a nice young guy investor. I am one of your students and I can say you Tim, Superman, Nathan Michaud are true teachers, you helped me to increase my gains around 20,000 is the last 5 months. Thank you so much. The best for you. Bruce.