Insider trading was at its peak in the 1980s, when a series of mergers and takeovers meant that execs were privy to plenty of market-moving information. The king of insider trading was Ivan Boesky, who became an icon of the era. He ran with some other big financial players, including Michael Milken, who ultimately pleaded guilty to several other felonies, and managed to sidestep insider trading charges.

In 1986, Boesky advised an audience of UC Berkeley students, “You can be greedy and still feel good about yourself.” He made the cover of Time Magazine the same year, which is when the SEC ultimately accused him of trading information from a Drexel Burnham Lambert banker. Boesky settled out of court with a payment of $100 million dollars, then served 22 months in prison.

Ivan Boesky amassed a fortune of over $200 million in the 1980s before an insider trading scandal landed him with a $100 million fine and prison time.
Born in Detroit in 1937, Ivan Boesky studied law before becoming a successful financier and amassing a fortune worth over $200 million dollars. His involvement in a 1986 insider trading scandal, however, ruined his reputation and landed him with a $100 million dollar fine and a prison sentence. The character Gordon Gekko in Wall Street (1987) is rumored to be partially based on Boesky.

White Collar Criminal

Financier, born in Detroit, Michigan. The son of a Russian immigrant, he studied law and worked as a tax accountant before moving into securities analysis, forming his own firm in 1975. Boesky was credited with (or blamed for) pioneering the junk bond market, later a symbol of the excesses of the 1980s. He had become one of Wall Street’s most successful arbitrageurs when he admitted to insider trading charges in 1986. Fined $100 million, he served time in prison before being given parole for good behavior in 1990.

In 1966, Boesky and his wife moved to New York where he worked at several brokerage houses. In 1975, he opened his own firm, the Ivan F. Boesky & Company, with $700,000 (equivalent to $3.1 million in 2016) in seed money from his wife’s family with a business plan of speculating on corporate takeovers. Boesky’s firm grew from profits as well as buy-in investments from new partnerships. By 1986, Boesky had become an arbitrageur who had amassed a fortune of more than US$200 million by betting on corporate takeovers and the $136 million in proceeds from the sale of The Beverly Hills Hotel.Boesky was on the cover of Time magazine December 1, 1986.

In 1987, a group of partners sued Boesky over what they claimed were misleading partnership documents.The U.S. Securities and Exchange Commission investigated him for making investments based on tips received from corporate insiders. These stock acquisitions were sometimes brazen, with massive purchases occurring only a few days before a corporation announced a takeover.

Although insider trading of this kind was illegal, laws prohibiting it were rarely enforced until Boesky was prosecuted. Boesky cooperated with the SEC and informed on others, including the case against financier Michael Milken. As a result of a plea bargain, Boesky received a prison sentence of 3 12 years and was fined US$100 million. Although he was released after two years, he was permanently barred from working in securities. He served his sentence at Lompoc Federal Prison Camp near Vandenberg Air Force Base in California.

Boesky never recovered his reputation after doing his prison time, and paid hundreds of millions of dollars in fines and compensation for his Guinness share-trading fraud role and a number of separate insider dealing scams. Later, Boesky, who is Jewish, embraced his Judaism and even took classes at the Jewish Theological Seminary of America where he had been a major donor; however, in 1987, following the fallout from his financial scandal, The New York Times reported that “after Ivan F. Boesky had been fined $100 million in the insider-trading scandal, the Jewish Theological Seminary, acting at his request, took his name off its $20 million library.”

His involvement in criminal activities is recounted in the book Den of Thieves by James B. Stewart.

Another version of these events is recounted by Jonathan Guinness in his book Requiem for a Family Business which suggests the SEC granted him immunity from prosecution and allowed him to continue to insider trade for significant profit whilst wire tapping him to entrap others.

In a 2012 interview with the New York Times, a cousin of Boesky’s disclosed that he is living in La Jolla, California

Source:

http://www.biography.com/people/ivan-boesky-17169748

WIKIPEDIA

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