Ivan Boesky, stock trader convicted in insider trading scandal, is dead at 87
Ivan F. Boesky, the flamboyant stock trader whose cooperation with the government cracked open one of the largest insider trading scandals in the history of Wall Street, has died at the age of 87. A representative at the Marianne Boesky Gallery, owned by Ivan Boesky’s daughter, confirmed his death. No other details were given.
The son of a Detroit delicatessen owner, Boesky was once considered one of the richest and most influential risk-takers on Wall Street. He had parlayed $700,000 from his late mother-in-law’s estate into a fortune estimated at more than $200 million, hurtling him into the ranks of Forbes magazine’s list of the 400 richest Americans.
Once implicated in insider trading, Boesky cooperated with a brash young U.S. attorney named Rudolph Giuliani in a bid for leniency, uncovering a scandal that shattered promising careers, blemished some of the most respected U.S. investment brokerages and injected a certain paranoia into the securities industry.
Working undercover, Boesky secretly taped three conversations with Michael Milken, the socalled “junk bond king” whose work with Drexel Burnham Lambert had revolutionized the credit markets. Milken eventually pleaded guilty to six felonies and served 22 months in prison, while Boesky paid a $100 million fine and spent 20 months in a minimum-security California prison nicknamed “Club Fed,” beginning in March 1988.
After Boesky’s arrest, accounts circulated widely that he had had told business students during a commencement address at the University of California at Berkeley in 1985 or 1986, “Greed is all right, by the way. I want you to know that. I think greed is healthy. You can be greedy and still feel good about yourself.”
Boesky was an arbitrageur, a risk-taker who made millions by betting on stocks thought to be the target of corporate takeovers. But some of his tips came from within the mergers and acquisitions departments of Drexel Burnham Lambert Inc. and Kidder, Peabody & Co.
Dennis Levine of Drexel and Martin Siegal of Kidder, Peabody fed Boesky confidential information in return for promised cut of profits of either 1% or 5%.
Boesky paid Siegal $700,000 in three installments, with a courier delivering briefcases full of cash at three clandestine meeting on a street corner and in the lobby of the Plaza Hotel in Manhattan. Boesky had made millions on Siegal’s tips, which included word that Getty Oil and Carnation Co. were ripe for takeovers.
Levine was arrested before his payout could come, tripped up by his own insider trading. Facing harsh penalties under the government’s racketeering statutes, Levine revealed everything and Boesky began talking as well, providing information leading to convictions or guilty pleas in cases involving several other prominent stock brokers.