Stock trader hit in insider trading scandal
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.”
The line was memorably echoed by Michael Douglas in his Oscar-winning portrayal of Gordon Gekko, a high-flying trader, in Oliver Stone’s 1987 film “Wall Street.”
“The point is, ladies and gentlemen, that greed, for lack of a better word, is good,” Douglas tells the shareholders of Teldar Paper. “Greed is right. Greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit.”
Boesky, however, said he couldn’t remember saying “greed is healthy” and denied another quotation attributed to him in the 1984 Atlantic Monthly, in which he allegedly said that climbing to the height of a huge pile of silver dollars would be “an aphrodisiac experience.”
At his 1987 sentencing Boesky’s lawyer quoted his psychiatrist as saying Boesky “has begun to recognize that he suffered from an abnormal and compulsive need to prove himself, to overcome some sense of inadequacy or inferiority that is rooted in his childhood.”
Three years after his release from a Brooklyn halfway house in April 1990, Boesky and his wife Seema divorced after 30 years of marriage.
Claiming he had been left penniless after paying fines, restitution and legal fees, he won $20 million in cash and $180,000 a year in alimony from his wife’s $100 million fortune. He also got a $2.5 million home in the La Jolla section of San Diego, where he lived with his boyhood friend, Houshang Wekili.