This is the case with the main character Gordon Gekko and as the film progresses, also that of his protégé named Bud Fox who started out as a bit player in the stock brokerage industry but in due time became a significant stockbroker due to the profitable trades he made as he engaged in extremely complicated and often illegal schemes to minimize his trading risks. One of his favorite tools is insider trading, which is using information on a firm that is not available to the general buying public which gives him an undue and illegal advantage (McGee 36).
Insider trading is a capital crime because it erodes confidence in the stock market as it is one of the leading sources for capital formation; the stock market is just like any market where buyers and sellers met and agree on a deal, except that what they deal and agree upon are monies and in effect, financing for starting a business and expanding an existing business by providing much-needed capital for entrepreneurs and businessmen. The entrepreneurs are the ones who need money while the investors provide that money buying their stocks offered on Wall Street by these stockbrokerage and investment houses who earn a commission.
Gekko and Fox teamed up and plotted to engage in a hostile takeover of an airline where Fox’s father works by using a leveraged buyout (LBO), and then turn around by using excess pension funds to pay off the debt incurred in this hostile takeover and earn profits from breaking up the airline and selling its assets individually. However, the law and the Securities and Exchange Commission (SEC) arrested both Fox and Gekko for insider trading. Economic aspects – the film showed how a stock market is essential to the economy of a nation as it serves as the marketplace where lenders and borrowers can meet and in turn help the economy achieve growth by providing the essential capital to finance new business ventures and expand existing ones such as introducing a new product line that requires money or enter new foreign markets to expand the sales by generating new revenue streams. The film also touches on the sensitive topic of greed which is why securities laws and regulations are put in place to protect the investing public from unscrupulous individuals and trading firms. A good example is the case of Martha Stewart who was convicted of insider trading regarding the sale of stocks she owned by using insider information before the stock price collapsed. In her case, she used an illegal method which is also unethical as it constitutes fraud. Capital – the word as used in economics means the man-made goods which are then used to produce a future continuous supply of goods and services. Capital is essentially of two kinds in terms of their ultimate end user: the first is capital goods used for further producing new capital goods for perpetuity (a continuous supply) and the second is for consumption in which there is eventual depletion. Capital gets worn out from use over a period of time, gets destroyed in natural or man-made calamities, and also become obsolete due to technological advances (like the telegraph equipment replaced by newer telephones and the old typewriters being replaced by personal computers). Obsolescence happens when a thing or service is still in good working condition and usable but no longer wanted (same case with the telephone landline which has been replaced by the cellular phone and other mobile electronics gadgets). Economics deals primarily with the concept of how to deal with scarcity and making trade-off decisions regarding where capital should be invested in the most efficient way. In the film, the monies of Gekko could have been used to fund