NEW YORK ( TheStreet) -- A few weeks before the FBI and U.S. regulators swooped down on notorious penny-stock boiler shop, Stratton Oakmont - the subject of Martin Scorsese's stock crime blockbuster, The Wolf of Wall Street -- an innovative financial news organization was born, calling itself TheStreet.com.
For the first time on the Internet or anywhere, accurate and detailed news on the workings of Wall Street would be provided to investors, many of whom had been lied to and fleeced by manipulators epitomized by the movie's pump-and-dump king, Jordan Belfort, played in the film by the devilish Leonardo DiCaprio.
"What we have here [are] a number of scoundrels," an attorney for one of the companies brought public by Stratton told TheStreet.
That company in question was fashion footwear-maker Steve Madden (SHOO - Get Report), whose principal - Steve Madden - would be implicated in the massive federal investigation. TheStreet reported the IPO drama showcased in Scorsese's film accurately and with great detail before other news organizations many times its size.
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The Street was willing to name names and call spades what they were. Its reporters learned that Stratton had fraudulently arranged to hide the secret control of the shoe company by Belfort, his Oakmont partner Daniel Porush and Porush's childhood buddy, Madden.
Madden would be convicted of stock manipulation and securities fraud and serve several years in federal prison.
"Questions have circulated for years concerning Madden's involvement with Stratton Oakmont," wrote the bird-dogging reporter, Robert Kowalski. "Rumors have circulated recently that Madden might be in trouble with the law," he continued, quite accurately.
TheStreet went much further, digging into the malfeasance not only of underwriting firms but of the issuers themselves - wolves alike.
"It's all just a different side of the same puzzle," the chief of the U.S. attorney's office for securities fraud in New York told a Street reporter. "We're ... interested in issuers who are committing crimes.
"It would be wrong to say that the issuers are merely victims of the situation," said another litigator who represented investor interests in class-action suits against Stratton. "They're not.
"In my experience, the issuers may have a sense of what's going on, but are not really driving the bus."
In this frenzied world of get-rich-quick stock jockeys and pink-sheet day wonders, the masters of the short had a field day.
Of course "we don't short stocks illegally," insisted one artist to our reporter, adding modestly. "I don't even know what an illegal short is.
"The Amex did call me regarding our short positions regarding [a defunct company]. Any representations regarding [my] trading or positions regarding the company are false and untrue."
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The young reporter nailed the story - and many thereafter -- and continues to this day keeping an watch on security fraud and shady dealings. Herb Greenberg (Herb on TheStreet) would look back on his early, halcyon days at TheStreet as a great incubator of journalistic skepticism, one that would allow the organization to shine a light on the dark recesses of Wall Street and serve readers with that most precious and high-value commodity in financial markets, the truth.
Stratton Oakmont was shut down in 1996, and Jordan Belfort was sentenced to four years in prison for securities fraud and money laundering. He published two books on those wild and reckless years -- "The Wolf of Wall Street" and "Catching the Wolf of Wall Street."
Convicted of fraud, given a lifetime ban of Wall Street and securities trading, Belfort received $940,500 for the movie rights.
--By William Inman in New York