Stratton Oakmont
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| Brokerage House | |
| Industry | Investment banking, stock exchange |
| Founded | 1989 |
| Founder | Jordan Belfort |
| Defunct | December 1996 |
| Headquarters | Lake Success, Long Island, New York, United States |
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Area served
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United States |
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Key people
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| Revenue | $3,000,000,000 (total) |
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Number of employees
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1,300 |
Stratton Oakmont, Inc. was a Long Island, New York, "over-the-counter" brokerage house founded by Jordan Belfort. It defrauded many shareholders leading to the arrest and incarceration of several executives, and the closing of the firm.
Jordan Belfort founded the firm of Stratton Oakmont in the late 1980s with Danny Porush. Earlier, Belfort opened a franchise of Stratton Securities, a minor league broker-dealer, and then bought out the entire firm. Stratton Oakmont was the largest OTC firm in the country during the late 1980s and 1990s. The firm was responsible for the initial public offering of 35 companies, including Steve Madden Ltd. Stratton Oakmont did not have a product control function to verify prices of its positions and monitor trading activity.
Stratton Oakmont participated in pump-and-dump schemes, a form of that involves artificially inflating the price of an owned through false and misleading positive statements, in order to sell the cheaply purchased stock at a higher price. Once the operators of the scheme "dump" their overvalued shares, the price falls and investors lose their money. Stratton Oakmont would also try to maintain the price of a stock by refusing to accept or process orders to sell the stock. Stocks that are the subject of pump and dump schemes are sometimes called "chop stocks".
In 1995, the firm sued Prodigy Services Co. for libel in a New York court, in a case that had wide legal implications.
The firm was the subject of numerous disciplinary actions brought by the NASD beginning in 1989. The firm was shut down in December 1996, and in 1999 Belfort and Porush were indicted for securities fraud and money laundering.
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Wikipedia