This movie is important in three aspects: how the relaxed government regulation law allowed manipulation of the market through illegal securities trading, the lack of ethics in business, and how morals in todays society are not ethical. The first discussion is the focus on the effects of insider trading on the stock market. An individual who obtains inside information about the plans of a publicly listed corporation can often make stock-trading profits by using the information to guide decisions relating to the purchase or sale of corporate securities.
1 Insider trading is a violation of the Supreme Courts interpretation of Section 10b of the Securities Exchange Act of 1934 and Securities and Exchange Commission (SEC) Rule 10b-5, prohibiting fraud in connection with the purchase or sale of securities. 2 In Wall Street Bud Fox is the tippee who receives a tip from his father, Martin Sheen, on Blue Star airlines that are about to be cleared in a investigation that would spur new growth in the company. Bud finally gets his wish to speak with his idol, Gordon Gekko, in which he informs Gekko of the not-yet-announced ruling reluctantly after his own research didnt impress Gekko.
Gekko then orders Bud to buy the stock for him which is a clear violation of the SEC Rule 10b-5. Additional violations continue through out the movie as Gekko pushes Bud to find information in connections with emerging business deals. Bud follows around Sir Larry Wildman to reveal a corporate takeover and he also dips to stealing information through a nightly cleaning business by searching filing cabinets for beneficial information. These acts are a violation of the Misappropriation Theory of the SEC Rule 10b-5 in which an individual obtains information unlawfully. This also violates the Code of Federal Regulations 17 C.
F. R. i?? 240. 10b-5 when Bud engages in an act to defraud a security exchange by directly seeking information in their facility without their concurrence. 3 These laws werent heavily enforced in 1985 as they are in current day. Congress has given the SEC additional power in the early 1990s and 2000s plus there have been advances in technology that allow securities to be more closely watched. The SEC has had its powers continually expanded since its creation in 1934 to curb insider trading and other securities fraud for the investors protection and to maintain the integrity of the securities markets.
4 In 1985, it was only a few isolated offenders that were caught. In particular, there was Ivan Frederick Boesky who was the biggest corporate raider in the 80s and who Wall Street was loosely based on with his Greed is right key-note speech. He accumulated over $200 million in corporate takeovers but the SEC eventually convicted him of insider trading and received 31/2 years in prison and a $100 million fine. 5 In todays society it is a much broader regulation problem, as the amount of data available is so great it can not be all carefully processed and checked.
This allows for the Kenneth Lays and Scott Sullivans of the world to exploit investors trust for their own financial gains without getting noticed until the damage is already done. Pump and dumping is also displayed in the movie in which an individual pumps up a stock before selling. 6 Gordon Gekko orders Bud Fox to buy shares of Annacon Steel, then tell him to recommend it to his friends and then offer a tip to the Wall Street Chronicle saying that Blue horseshoe loves this stock. This causes the stock to see an enormous appreciation, Gekko sells the stock to Sir Larry for a one day gain of 46%.
Another key aspect of this movie is how ethics are portrayed in business, showing that there are very little ethics in the business world. Ethics dont get the penthouse suites, the exotic girls, or the wild excitement of the big deals. This teaches us that in order to succeed in life, laws must be broken because theres always someone whos hungrier that will do whatever it takes to get ahead. The most ethical person in this movie is Martin Sheen. As Buds father he tries to set an example to his son but Bud is too blinded by the Gekkos lifestyle.
Bud looks down on his fathers blue collar values. Martin tries to act as Charlies conscience saying that this way of making money is like selling his soul to the devil, trading a short time at the top in exchange for a bitter end. The runner-up for the most ethical goes to Lou Mannheim played by Hal Holbrook who acts as a mentor to the stockbroker firm. Hal offers advice as a senior management executive and rationalizes with Bud. When Bud comes to him with a sure thing, Hal simply states that the only things that are sure in life are death and taxes.
Hal is the typical long-term investor who gets outshined by the short-term stars from time to time, but will hold a steady profit in the end, a mature bear surrounded by baby bulls in Wall Street terms. The least ethical person in Wall Street is undoubtedly Gordon Gekko. Gekko is a corporate raider who corrupts, destroys, and pillages businesses all in the name of greed. He pushes Bud into gathering information illegally about his competitors if Bud wishes to continue doing business with him.
He offers unorthodox perks to inspire his workers, such as sending prostitutes to Buds apartment to give a taste of what benefits await him if he succeeds. He tries to extort Blue Star Airlines to reap millions of dollars in profits by breaking up the company and selling it off, in the process destroying the lives of thousands of workers. He also has a long-time affair with Daryl Hannah and continues seeing her while she is dating Bud. Cheating with a cheater doesnt make the act ethical anymore than two wrongs making a right.
Gekko also has the greed for more power and wealth and will stop at nothing until hes at the top. For him, this means being atop Sir Larry Wildman who has a fortune that is valued at about six times greater than Gekkos. Enough is never enough until you have the best of the best. The speech that he gives during a Teldar Paper stock holder meeting reveals how he tries to justify his actions being a profit-obsessed, ruthless, slash and burn capitalist. Greed is good, greed works, greed is right. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit.
Greed in all its form, greed for life, money, love, knowledge has marked the upward surge in mankind. He tries to reason his actions with the too often said sayings nobody gets hurt and everyone wins when people are getting hurt and losing their god-given right of pursuit to happiness. 7 The last legal issue that this motion picture touched was how morals in todays society reflects an unethical determination to arise with a take no prisoners attitude. The 1985 bull market brought in a large number of new investors who wanted to make a quick buck because they heard others were making easy money.
People did not want to work hard for their money, thinking they could just throw money at the wall and it would come back with an enormous profit. The people who did make gains in this time were the people that were poor, smart, hungry and (had) no feelings that were willing to do whatever it took to make a name for themselves and were not caught by any Federal agents. Bud Fox did whatever it took to arise to the level Gekko was and it ended up costing him his job, reputation, and freedom. But how many people actually get caught that do these type of deeds? Not many.
Most anyone would be willing to risk their neck to be in Gekkos shoes. The morals in society tend to idolize the villains, no longer the heroes. Gekko is the villain / pirate / pillager is this stock market blockbuster and everyone wants to be like him. In the documentary section of the DVD, Michael Douglas said he was thanked by many people because it was because of him that they got into the stock market. It wasnt because he was a law abiding citizen, it was because he lived the life everyone aspires. Gekkos equivalent in the modern day culture would have to be Donald Trump.
Trump is often idolized, perhaps more so lately since the popularity of the Apprentice was so great, for his actions and his lifestyle. Even he recently thumped his investors in his Trump Casinos business by declaring bankruptcy for that branch of his business. Investors lost millions of millions because needed more money by restructuring the businesses debt. Yet, he is still looked up to for his dealings and lifestyle. Worse than the admiration of the villain is the current state of todays economy, where individuals like Gekko are no longer the exception.
The actions and dealings pointed out in Wall Street seem to be common today and are not shocking. These have become expected from corporations where the bottom line is the only important fact of the company. It doesnt matter if a drug is recommended for a purpose that it had no authorization to treat as Pfizer recently did. Its only the bottom line and having a huge profit isnt sufficient anymore; profits are expected to achieve double digit growth and profits year after year after year. If it doesnt meet the expectations then its stock is beaten mercilessly on the trading floor.
Enough is never enough. The current value system in corporate America places profits and wealth above everything else, including the soft legal boundaries that allow relaxed accounting practices among other semi-illegal acts. Wall Street does provide an important lesson on how large corporate executives can manipulate their way to success. Their actions along that road tend to never be ethical and barely legal. These ethics have become acceptable / expected in todays society for the pursuit of the bottom line. The greed for more wealth and power at any and all costs is the drive in society.
1 Jentz, Gaylord A. and Roger LeRoy Miller. Business Law Today, The Essentials. Thomson, South-Western. Ohio: Mason. 2003 pg. 157.
6 Jentz, Gaylord A. and Roger LeRoy Miller. Business Law Today, The Essentials. Thomson, South-Western. Ohio: Mason. 2003 pg. 560.