Sex and Drugs and I.P.O.s

Martin Scorsese’s Approach in ‘The Wolf of Wall Street’

If you want to know the truth, the Wolf of Wall Street â€" the person, that is, not the Martin Scorsese-Leonardo DiCaprio movie that opens on Christmas Day â€" spent only a fleeting few months on the actual Wall Street. In 1987, Jordan Belfort â€" a.k.a. the wolf himself â€" took a job at L. F. Rothschild, an old white-shoe firm. It was his first job in the business, and he was given the assignment of cold-calling “prospects” that he would then turn over to a broker. In his memoir â€" upon which the movie is based â€" Mr. Belfort claims, among other things, that a successful Rothschild broker (played by Matthew McConaughey on screen) took him to lunch on his first day and told him to masturbate often if he hoped to be a good broker himself. Given Rothschild’s stodgy reputation, I tend to think this story is an exaggeration, an act of salesmanship intended to lure in Hollywood. No matter. Not long after Mr. Belfort began working for L. .. Rothschild, the crash of 1987 wiped out the firm and took his job with it.

Terence Winter, the film’s screenwriter.

It was Long Island where Belfort picked up the pieces. He found a job pitching penny stocks â€" that is, stocks that are too small to be listed on any exchange, many of which are fly-by-night companies â€" and realized he had found his calling. He was such a good salesman that he soon went out on his own, founding a brokerage house with his friend Danny Porush. They called it Stratton Oakmont, mainly because the title sounded high-toned, which they were most certainly not. Stratton Oakmont was a classic “pump and dump” operation: Mr. Belfort and several of his fellow executives would buy up stock in a particular company and then have his legions of brokers (using a script he had written) sell that stock to unwitting investors â€" which would cause the stock to rise, allowing Belfort and company to sell their shares at a nice profit. Inevitably, the stock would fall back to earth, leaving the investors holding the bag. Everything I’ve just described is illegal, as Mr. Belfort was well aware.

p itemprop="articleBody"> When “The Wolf of Wall Street” hits screens, there will inevitably be a temptation to connect it to the financial crisis of five years ago. But the rise and fall of Stratton Oakmont in the late 1980s and ’90s has nothing to do with the events that brought the financial system to the brink. It’s just that movies don’t do well describing what really happens day to day on Wall Street, not even Oliver Stone’s two tries. It is easier â€" and in many ways more sensible â€" to do films like “The Wolf of Wall Street” and “Boiler Room” (the 2000 drama that was also said to be modeled after Stratton Oakmont). It is much easier to convey on screen Mr. Belfort’s greed than Golman Sachs’s.

Still, while those two firms are worlds apart in most respects, there is one important way in which they are alike, and why using Stratton Oakmont as a proxy for Wall Street is not such a stretch. The brokers (or traders in the case of Goldman) are, at bottom, salesmen. As the saying goes, “Stocks are sold, not bought.” What is mesmerizing about Mr. Belfort (played in the film by Mr. DiCaprio) is that he is an extreme example of the smooth-talking, I-can-sell-anything, salesman. And he’s hardly the first such type in finance. In the early 1960s, a man named Bernard Cornfeld used to draw people into his financial empire by asking, “Do you sincerely want to be rich?” And they say Charles Ponzi was a pretty good salesman, too. What does Goldman Sachs do if not sell? It’s just a different product.

As the Stratton Oakmont brokers got rich by following Mr. Belfort’s scripts, they became fiercely loyal to their boss. Mr. Belfort, for his part, “lived the life” (as he puts it in his book) and then some. He had several homes, a yacht, a helicopter and a trophy wife. By the time he was 26, he was worth tens of millions of dollars. He and his fellow executives took copious amounts of drugs and employed prostitutes almost daily. In his book, Mr. Belfort makes Stratton Oakmont sound like the most debauched brokerage that ever existed â€" and the movie takes full advantage, with scene after scene of drug-addled nights and sexcapades in the office during trading hours. And while I was inclined to view this as an exaggeration as well, Terence Winter, the screenwriter, told me that when he interviewed the F.B.I. agent who finally nailed Mr. Belfort, the man said, “I tracked this guy for 10 years, and everything he wrote is true.”

As it happens, Mr. Winter, best known for his work on “The Sopranos” and “Boardwalk Empire,” also spent a short time on Wall Street. He was in law school in the mid-1980s when he worked part time as a legal assistant in the equity trading department at Merrill Lynch. He saw excess there, too, but it was mainly in the excessive salaries the executives made, especially compared with the good (or lack thereof) their services provided. What he most certainly did not see was drugs being openly consumed in the office, or hookers having the run of the place. Or, for that matter, crimes being committed openly. Wall Street’s sins are subtler than that. To describe Stratton Oakmont, Mr. Winter’s time on at Merrill Lynch did him little good.

A version of this article appears in print on December 22, 2013, on page AR1 of the New York edition with the headline: Sex and Drugs and I.P.O.s.