Wall Street’s Wild Ride: Nov. 19, 1984

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The fast-money era of the 1980s quickly came to re­sem­ble, well, a carousel. Seated on it were cor­po­rate raiders such as Vic­tor Pos­ner, Carl Lind­ner Jr. and the Belzberg broth­ers (Sa­muel and Wil­liam). At its con­trols: Drexel Burn­ham Lam­bert’s 38-year-old su­per­star, Michael Milken.

Milken’s mar­velous money ma­chine ran on junk bonds—a $41.7 bil­lion mar­ket ($96.7 bil­lion in 2016 dol­lars) that had grown 340% in five years. He helped ex­ec­u­tives put to­gether deals, and of­ten those clients be­came in­vestors in fu­ture Milken­led of­fer­ings. “In­ces­tu­ous? That is one way of putting it,” con­cluded the story’s au­thors, Al­lan Sloan and Howard Rud­nit­sky. “There is noth­ing il­le­gal about this. It is sim­ply a case of one hand wash­ing the other—to [ev­ery­one’s] mu­tual profit.”

The gov­ern­ment dis­agreed. When a po­lit­i­cally am­bi­tious pros­e­cu­tor named Rudy Gi­u­liani needed a poster boy for the decade’s ex­cesses, he set his sights on Milken, who would plead guilty to fraud in 1990 and serve 22 months in prison. Since then he has de­voted him­self to phi­lan­thropy.

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