Universiti Brunei Darussalam

School of Business and Economics

Module BM-5301: Corporate Governance.

Lecturer: Dr Sazali Zainal Abidin.

[Team 9] ‘Wall Street: Money Never Sleeps’ (2010) on a

Financial Governance Perspective.

Nurul Sariyah binti Ramlan 22M2922

Fatin Aqilah binti Haji Mohaimin 22M2910

Semivolos Alena 21M1714

Titty Dewana binti Abdullah 22M2932

Ak Md Haziq Wazien Bin Pg Hj Dahrin 22M2947

Dk Ratna Siti Nooraidah Binti Pg D.P Hj Hamzad 21M1506

Siti Diyana binti Hj Julahi 22M2907

Clement Bin Marzukiarman 22M2975

Due date: 10th November, 2022.

TABLE OF CONTENTS

1. Synopsis. 3

2. Movie analysis: 4

2.1 Corporate governance through the plot. 4

2.2 Issue pertaining to financial reporting featured in the movie. 5

2.3 How shareholders and stakeholders are affected as portrayed in the movie. 5

2.4 Depiction of the role of directors in the movie. 6

3. Conclusion. 6

References. 8
 WALL STREET: MONEY NEVER SLEEPS (2010).

1. Synopsis.

The film is set in New York and opens with Gordon Gekko being released from prison in
2001 after serving 8 years for insider trading. While in prison, he wrote a book titled “Is
Greed Good?” and published it in 2008, warning the market about a potential economic
deterioration. His book promotion plays on a tv where the audience is introduced to the main
protagonist Jacob Moore with his girlfriend Winnie Gekko -who is Gordon’s daughter.

Jacob, a trader in Keller Zabel Investments (KZI), is at loss as to how a rumor about KZI
made the company lose 52% of its market value in a week. This forces Zabel -the managing
director of KZI, to seek a bailout package however he gets blocked by his rival firm Churchill
Schwartz (CS) citing moral hazard. This leads to Zabel commiting suicide.

Jacob, devastated by the death of his mentor, pushes on with his life and attends Gordon’s
talk without Winnie knowing, and is able to meet with Gordon. Through Gordon, Jacob
learns the rumor that set KZI’s downfall was spread by James Bretton -CEO of CS, and
fueled by revenge, Jacob uses the same tactic to plummet CS’s value.

The loss of $120 million did not anger Bretton, but rather he is impressed by Jacob and
poaches him to work for CS. Bretton continues to be astonished by Jacob when Jacob
intervenes in an important meeting with a Chinese investor by convincing them to invest into
his Fusion Energy project -despite being advised against it multiple times.

Jacob continues to work with CS while also seeing Gordon behind Winnie’s back in order to
learn more about Bretton. Through Gordon, Jacob learns that Bretton has been trading on his
own account called the Locust Fund. Jacob -excited that his Fusion Project will be invested
by the Chinese, manages to convince Winnie to forgive Gordon.

The housing market crisis happens, taking a toll on everyone, even CS. This is when the
movie is at its climax when Jacob learns that Bretton has diverted the Chinese to invest into
Babacon -the original project Bretton had wanted them to fund in the first place. Angered by
this sudden change, Jacob turns to Gordon, who informs Jacob that Bretton knew the housing
market would crash and has been betting against it. Gordon also confesses that he has $100
million in a bank in Switzerland under Winnie’s account which he knows can help Jacob on
his Fusion Energy project. He promises to invest that money if he, Jacob, could get Winnie to
transfer it to him before giving that money to Gordon in order to legitimize it.

However, this is when Gordon’s true intention is revealed; he steals the money from his own
daughter and opens a financial company in London where he finds success by turning $100
million to $1.1 billion. This puts a strain on Jacob and Winnie’s relationship, though it did
not stop them from working together in the end. Jacob, in an effort to fix the relationship and
amend his wrong doings, convinces Winnie to publish an article about Bretton’s frauds and
how he drove Louis to his demise. This leads to Bretton being investigated for tax evasion,
stock manipulation and for causing Louis’ death.

The movie ends with Gordon redeeming himself by coming back to New York to his
pregnant daughter and Jacob, and giving back their money by investing into Fusion Energy.

2. Movie analysis.

2.1 Corporate governance through the plot.

Looking at the main plot of the movie from a corporate governance perspective, there was
poor corporate governance. The movie stems from deception, manipulation, and greed,
displaying the main themes of the movie. There were several ethical issues in the movie that
can be depicted, however the ones related to corporate governance would be: spreading
rumors to benefit financially, insider trading, and fraud.

As this movie was a sequel for the 1987 movie, Wall Street, it begins with Gordon Gekko
being released from his long prison term for Insider Trading and security fraud. This already
hints at the poor corporate governance. Furthermore, in the early scenes of the movie, the
protagonist, Jacob Moore, was given a bonus of $1.4 million before a late-night treasury
meeting despite the firm being on the verge of collapse. This raises a significant ethical
question regarding the amount of compensation that traders and bankers receive.

Additionally, the movie shows Jacob conducting a formal friendship with Gordon, someone
who was jailed for insider trading. This friendship was done in order to benefit both of them;
Jacob learns through Gordon about Bretton and in return, Jacob tries to fix Gordon’s
relationship with his daughter. This raises questions about ethics even though this action
would be beneficial in the end.

By the end of the film, Bretton was discovered for his fraudulent actions and, in an attempt to
save himself, shifts the blame on someone else. This behavior is immoral and has
repercussions on Wall Street. It is believed that Wall Street companies' careless and unduly
risky activity was what ultimately led to the downfall of the housing bubble.

2.2 Issue pertaining to financial reporting featured in the movie.

Gordon Gekko transferred an estimated $100 Million to an offshore account in Switzerland

before he was sent to jail to avoid taxes. This meant that Gekko hid his earnings and did not
truthfully report to the government, specifically the IRS to avoid taxes to be issued. James
Bretton also did a similar act where he used an offshore funding account in Caymans called
Locust fund. He used this to take advantage of the stock manipulation he did under the
Churchill Schwartz firm then transferred his earnings to the offshore account. Thus, avoiding
the responsibility to report earnings and avoiding tax to be imposed on it.

2.3 How shareholders and stakeholders are affected as portrayed in the movie.

The movie portrays a realistic response of shareholders and stakeholders, particularly when
KZI loses their market capitalisation; fearing they would be at a loss, people began
abandoning KZI by selling their shares. Louis, unable to seek a bailout package to save his
company, commits suicide.

Fueled by revenge for his mentor, Jacob uses the same rumor to plummet CS’s stock price.
SImilarly to KZI, shareholders and stakeholders also stop investing into the firm, making CS
lose $120 million.

In the background, the mortgage market crash plays a devastating role for everyone, and
shows how it negatively affects people from firms like CS down to realtors. However,
Bretton sees it as an opportunity and, knowing the mortgage crash was about to happen, has
been betting against it through credit default swap. Under the pretense of saving CS from the
market crash, Bretton seeks a bailout package but has been secretly trading with his personal
account.
In the end, Bretton gets caught for fraud, and CS forms a partnership with Gordon’s new
financial company.

Overall, the movie portrays how insider trading puts a disadvantage for shareholders and
stakeholders by undermining the public’s confidence in financial markets, affecting market
liquidity and reducing investor return (Kurov & Wolfe, 2022).

2.4 Depiction of the role of directors in the movie.

The movie portrays a mixed depiction of the roles of directors; in KZI, the directors have a
clear division of responsibilities and agreed procedure in furtherance of their duties.
Additionally, all directors have access to advice and services of the company as seen when
Louis takes part in delivering advice to his subordinate. Whereas in CS, due diligence follows
only after Winnie’s publication of Bretton’s dealings. Additionally, there are no presence of
independent and non-executive directors to examine and condemn Bretton spreading rumors
to bring down KZI.

Finally, there are no frequent meetings with external shareholders to help in the decision
making process, and this one-sidedness is pertinent as to why the role of directors should be
assumed by those who are independent from management and free from any other relations to
ensure good corporate governance is being practiced.

3. Conclusion.

The main themes the movie covers include greed and deception through inadequate corporate
governance practices as well as fraudulent financial reporting. The movie also raises
questions on ethics and morals encapsulating the world of finance. The main character, Jacob,
valued revenge over ethical considerations and even partnered with Gordon, a convicted man.
Bretton’s character is the epitome of greed by leveraging against the market at the right time
in order to take advantage of it, and funding his own account. Gordon’s fraud knows no limit
as he steals from his own daughter.
The lack of internal and external auditing and independent directors from both KZI and CS is
among the root of the issue pertaining to the poor corporate governance structure in the
movie, as their presence would prevent scandals from emerging.

In conclusion, the movie was able to convey the message of poor corporate governance
practices leading to corruption and fraud.
References .
Kurov, A. & Wolfe, M. (2022, February 18th). What’s insider trading and why it’s a big
problem. The Conversation. Retrieved from https://theconversation.com/whats-insider-
trading-and-why-its-a-big-problem-176940

Stone, O. (Director). (2010). Wall Street; Money Never Sleeps [Film]. Twentieth Century
Fox, Pressman Film, Dunde Entertainment, Dune Entertainment III LLC, RD Locations
Productions.