In 2001, Gordon Gekko (Michael Douglas) is released from prison after serving eight years for insider trading and securities fraud. Seven years later, Gekko is promoting his new book Is Greed Good?, warning about the coming economic downturn. His estranged daughter, Winnie (Carey Mulligan), runs a small, non-profit news website and is dating Jacob Moore (Shia LaBeouf), a top proprietary trader at Keller Zabel Investments (KZI). Jacob is a protĂŠgĂŠ of managing director Louis Zabel (Frank Langella), and is trying to raise money for a fusion research project which would create massive amounts of clean energy for the world. Jake is also financially assisting his mother (Susan Sarandon), who has begun a new career selling real estate.
When the recession of 2008 hits, Keller Zabel's stock loses more than 50% of its value. Louis Zabel tries to arrange a bailout for KZI from other Wall Street banks but is blocked by Bretton James (Josh Brolin), head of rival firm Churchill Schwartz, which Louis Zabel had refused to bail out eight years earlier. Zabel kills himself by jumping in front of a subway train because he cannot handle the stress and embarrassment of losing his company.
A distraught Jacob proposes marriage to Winnie, who accepts, then attends a lecture given by Gordon Gekko and introduces himself afterward. Gekko tells him that Keller Zabel's collapse started when rumors of the company having toxic debt started to spread. Jacob and Gekko arrange a trade: Jacob will try to reconcile Winnie's and Gekko's relationship, and Gekko will gather information to destroy Bretton's career to seek revenge for Zabel's suicide.
Jake, aided by Gekko, learns that Bretton James profited from the Keller Zabel collapse. In revenge, Jake spreads rumors about the nationalization of an Equatorial Guinea oil field owned by Churchill Schwartz. The company loses $120 million, but Bretton offers Jake a job, impressed by his initiative. In his new position, Jake convinces Chinese investors to fund the fusion research by Dr. Masters (Austin Pendleton) he has been supporting. Bretton is impressed even more.
Jake attends a fundraiser with Winnie and pays for a seat at a table for Gekko priced at $10,000. Gekko confronts Bretton about what he did to him and also to Zabel. Bretton mocks him that no one cares what Gekko knows or thinks anymore. Gekko also bumps into Bud Fox (Charlie Sheen), and they discuss their shared experience going to jail. Gekko then follows Winnie outside, where she explains why she blames him for everything that went wrong, particularly her brother Rudy's suicide. Gekko claims he paid for the best therapists and even paid off a drug dealer to stop selling to Rudy, who died from an overdose. Winnie forgives him somewhat.
As the economy starts to crumble, Bretton and business mentor Julius Steinhardt (Eli Wallach) advise federal regulators what drastic actions must be taken. Jake's mother continues to come to him for large sums of money. Winnie then announces to Jake she is pregnant with a boy. After riding motorcycles together, Bretton reveals to Jake that the Chinese investment is going into solar panels and fossil fuels instead of fusion research, leaving Jake furious and feeling betrayed.
Gekko proposes a solution, using a $100 million trust fund account in Switzerland, which Gekko set up for Winnie in the 1980s, to fund the research and save the company. She signs the money over to Jake, who then entrusts it to Gekko to legitimize the funds for investment in the fusion research company. However, the money never arrives, and Gekko betrays his daughter and Jake by leaving the country with Winnie's $100 million. Jake realizes that Gekko has been using him to get the money in the account for his own gain. Winnie then tells Jake to leave, no longer trusting him.
Gekko is now in London, running a hugely successful hedgefund-like financial company, capitalized by the $100 million. Jake travels there to propose one last trade: Winnie gets her money back, and Gekko can participate in his grandson's life. Gekko, however, refuses.
Jake pieces together everything from Keller Zabel's collapse to the economic bailout of Bretton's company and gives the information to Winnie, telling her that revealing it will bring her website publicity and credibility. Winnie runs the story, and Bretton James is exposed. The investors, including Steinhardt, promptly abandon Bretton and go to Gekko on the back of his $1.1 billion return as Bretton finds himself under intense legal scrutiny by the government.
Jake has successfully reunited with Winnie in New York, when late one night Gekko appears and tells them that he deposited $100 million into the fusion research's account anonymously. He apologizes to them. One year later, Gekko is seen at his grandson Louis's first birthday party, along with Jacob's mother and Jacob and Winnie's friends.

Question: Why did Keller Zabel's collapse happen, according to Gekko?
Answer: There were rumors the compay had toxic levels of debt.
Alternative answer: Rumors had spread about the company having bad debt.