You may not know the name, but you know his moniker: The Wolf of Wall Street.
Jordan Belfort, the former stockbroker and convicted felon made even more famous by the 2013 Leonardo DiCaprio film, weighed in Saturday on the GameStop-WallStreetBets-Robinhood saga.
“It’s about time that the little guy gave it to Wall Street. It’s so gratifying to see. I’m still in shock of it actually happening,” Belfort said.
In an appearance on “Watters’ World” on Fox News, host Jesse Watters said moves by Wall Street conglomerates to pressure retail trading platforms like Robinhood to stop trading on stocks like GameStop was likely illegal.
“I think it goes beyond that,” Belfort said. “When I first saw it happen … when I really investigated what happened,” he said, “they broke a tremendous amount of laws …”
“I think Robinhood’s out of business because the amount of lawsuits they’re gonna get right now, from every single person on both sides of it … They’ll say, ‘Wait, I couldn’t buy … what I wanted to buy,’ or ‘I was forced to sell’ — They’re done, Robinhood.”
“Someone needs to go to jail, it’s true,” he added. “At first I wasn’t that upset, but last night I saw that the shorts were still short.”
A throng of Average Joes driven by a Reddit poster started buying up GameStop shares as big brokers were shorting them, which thrust hedge funds billions of dollars into the red and propped up a failing video game company well beyond its actual value. Sites like Robinhood eventually halted the sale of Gamestop shares.
“They shut down these platforms for the little guy like the way Parler got shut down,” he said, comparing the situation to that of Parler, a social media platform essentially shut down by Amazon.
“Now, how about this one?” Belfort said. “Google eliminated 100,000 negative reviews off of Robinhood. … I can’t believe the things that are being allowed to happen right now and it’s almost like Big Tech has impunity, Wall Street has had impunity. … Until someone goes to jail for this, it’s gonna keep happening again and again.”
But Belfort warned investors. “Please be careful,” he said, “because at a certain point in time the party’s gonna end for these stocks and they’re gonna drop precipitously — and unless you’re careful you’re gonna lose a ton of money.”
The Gamestop stock price skyrocketed by around 8,000% from six months ago. Big brokers, hedge funds, and professional investors were short-selling, which means they borrowed shares of stock to sell and planned to buy them back later so they could return them, letting them pocket the profit if the stock price went down.
“Because short sellers — frequently hedge funds — in essence are betting against a company’s success, it can be a risky position,” NBC explained. “Any positive news or enthusiasm for the stock will push up the stock’s valuation, minimizing profit for the short seller. In the case of GameStop, chatter on massive online trading forums invigorated interest in buying the stock, pushing up the price, which in turn fueled more interest.”
“The speculative trading left short sellers with no more shares to buy to cover their positions, creating a short squeeze and leaving them with millions of dollars in stocks they had bought at a high price but which they then had to offload at an even higher price,” NBC said.