“Wizard of Lies” will make noise on Saturday, when the peek behind the biggest-ever Ponzi scheme in history premieres on HBO.
But what the hell is a Ponzi scheme anyway? And what do all of those other confusing financial phrases Robert De Niro (playing Bernie Madoff) keeps mumbling even mean? Lucky reader: TheWrap‘s got your back.
Below are nine (hopefully) over-simplified definitions of some complex terms that will arise over the film’s few hours.
A hedge fund invests pooled money in hopes of providing high returns to those in the group. They’re basically unregulated mutual funds for rich people. The term “hedge” originated from the idea that the funds “hedged” one’s bets by investing for both the short and longterm. They’ve since evolved a bit.
Market maker
Bernard L. Madoff Investment Securities LLC was a Wall Street “market maker” before the boss was considered a huge fraud. A market maker is a designated company or individual that is always prepared to buy or sell a security at a publicly displayed price. This way, the markets stay liquid since someone always has their wallet out.
Treasuries
Treasuries are tradable debt obligations issued by the government. You’ve probably heard of T-Bills, but treasuries can also be notes or bonds — it kind of all depends on how long you’re willing to have money tied up.
The cool thing about treasuries is that there’s essentially no risk, because the government isn’t going anywhere, regardless of how this year goes. Before you pull all your money out of the stock market, however, be prepared for very low returns in exchange for that confidence level.
The SEC stands for the Securities and Exchange Commission, which is the government organization that should have figured Madoff out a long time before it did. This is the scary agency that enforces securities laws and proposes the rules — kind of like the IRS for stock markets.
A Republican named Dr. Michael Piwowar is the current Commissioner. Don’t make him angry; you wouldn’t like him when he’s angry.
Ponzi scheme
A Ponzi scheme is a type of fraud in which the creator of a fund — like Madoff — promises investors especially high returns. The sales pitch is usually claims that the trader has some brilliant proprietary system and they’re so much smarter than everyone else, blah, blah, blah.
However, in reality, rather than actually paying dividends earned from real investments, the creator simply pays out money from the next investor’s money. Madoff never invested people’s money in his “special” fund — he put it in his own Chase bank account, which is exactly what he used to pay people. The con is named after Charles Ponzi, who sounds like a real asshole.
NASDAQ
The NASDAQ — the National Association of Securities Dealers Automated Quotations — is the second largest stock exchange in the world, behind only the New York Stock Exchange. Madoff helped pioneer the electronic market by implementing computers into the game before many others. He was eventually named chairman of NASDAQ, a high honor for the crook.
The “Nasdaq” can also refer to a portion of the market called the Nasdaq Composite Index. So, if someone says “the Nasdaq is up” or down, they’re talking about that barometer, not the acronym.
Got a penny? You’ve got a stock! Well, maybe you’ll need up to 499 of those pennies. This one is pretty easy: Penny stocks are common shares of dirt cheap companies, valued at less than five bucks per share. This tempting option is super-volatile, so while they’re financially easy to get into, be ready to lose your pennies due to the high risk.
Penny stocks aren’t trading on a national exchange — they’re considered over-the-counter securities. Think Tylenol versus Percocet. Penny stocks often trade on …
Pink sheets
Pink sheets are a listing of companies that are too small for the bigger stock exchanges like NASDAQ and the New York Stock Exchange to bother with. There are no requirements for a company to get listed, other than submitting a form. Companies listed on the pink sheets also do not have to file any paperwork with the SEC, making it difficult to get a real sense of how they are performing financially. These listings are perfect for shady types. (See: “The Wolf of Wall Street.”)
Feeder funds
Picture the reverse of baby birds eating out of mama’s mouth, but try not to throw up.
Feeder funds are smaller funds that feed into a larger, master fund. The master fund then controls all of the investment capital, like a boss. Profits made by the master are then split among the various feeder funds, based on how much they invested. The feeder fund is the cousin of a fund of funds, which is a lesson for the sequel — and a lot of the word “fund” for one sentence.
10 Biggest Billion-Dollar Entertainment Deals in 2016 (Photos)
Media and entertainment dealmakers returned in full force this year after a quiet 2015, as there were nine mergers and acquisitions valued at more than $1 billion -- from Chinese buyers such as the Dalian Wanda Group to AT&T, which agreed to acquire Time Warner for $85 billion. Here's a rundown of the biggest.
Various
10. Disney buys a minority stake in BAMTech
Price tag: $1 billion
In August, the Mouse House announced that it paid $1 billion for a 33 percent stake in streaming video technology company BAMTech, which was spun off from Major League Baseball’s MLB Advanced Media. Disney plans to use BAMTech’s technology to launch a standalone ESPN streaming service – but without the same content as linear ESPN.
The real estate and entertainment conglomerate owned by China’s richest man continues to snap up showbiz companies by the billion, acquiring the Golden Globes and American Music Awards producer for a cool $1 billion earlier this month.
Dick Clark Productions
8. Rovi acquires TiVo
Price tag: $1.1 billion
Video technology firm Rovi Corp., bought the pioneering live-TV recording tech company for $1.1 billion in a deal that was finalized in September. After the deal was complete, Rovi adopted the better-known TiVo name.
Getty Images
7. AMC Theatres buys Carmike Cinemas
Price tag: $1.2 billion
Wanda-owned AMC Theatres acquired Carmike, the U.S.’ fourth-largest exhibitor, forming the biggest theater chain in the country with more than 600 theaters. That surpasses Regal Entertainment, which operates 565 locations.
AMC/Carmike
6. AMC Theatres buys Odeon & UCI Cinemas
Price tag: $1.2 billion
AMC also added Odeon & UCI Cinemas, Europe's biggest chain, to its ever-expanding suite of cinemas. AMC will rename the company to Odeon Cinemas Group and maintain its London headquarters.
AMC/Odeon & UCI
5. Dalian Wanda Group buys Legendary Entertainment
Price tag: $3.5 billion
Wanda was responsible for the first megadeal of 2016, when it acquired the “Jurassic World” production company for $3.5 billion. Legendary lost $500 million in 2015, but its action-packed fare such as “Warcraft” is popular in China’s fast-growing movie market.
Legendary/Wanda
4. Comcast's NBCUniversal buys DreamWorks
Price tag: $3.8 billion
The blowout success of animated films like “Zootopia” and “Finding Dory” was one of the stories of 2016, and NBCU doubled down on the genre by adding the “Kung Fu Panda” and “Shrek” studio to its fold.
DreamWorks
3. Lionsgate merges with Starz
Price tag: $4.4 billion
The “Hunger Games” studio and premium cable channel announced their merger plans in June, a year after telecom billionaire and major Starz shareholder John Malone bought a stake in Lionsgate. Starz will become an independently run subsidiary of Lionsgate once the deal is officially approved.
Lionsgate/Starz
2. Verizon buys Yahoo
Price tag: $4.8 billion – or maybe less
The embattled Internet 1.0 company finally found its lifeboat, selling its core business to Verizon for $4.8 billion in July, eight years after rejecting a $45 billion bid from Microsoft. But after the extent of Yahoo’s 2014 hack was revealed, Verizon was pushing for a $1 billion discount, and has been taking a second look at the deal.
Verizon/Yahoo
1. AT&T agrees to acquire Time Warner
Price tag: $85.4 billion
AT&T agreed to buy Time Warner, combining two century-old companies to create a content and distribution powerhouse in the biggest media deal since the ill-fated 2000 AOL-Time Warner merger. One caveat: Donald Trump, who has been an outspoken critic of Time Warner’s CNN, had threatened to block the deal. However, a Wall Street-friendly Republican Congress could provide a smoother path.
AT&T/Time Warner
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Rewind 2016: From China’s Dalian Wanda Group to AT&T, deep-pocketed buyers were chasing content all year
Media and entertainment dealmakers returned in full force this year after a quiet 2015, as there were nine mergers and acquisitions valued at more than $1 billion -- from Chinese buyers such as the Dalian Wanda Group to AT&T, which agreed to acquire Time Warner for $85 billion. Here's a rundown of the biggest.