Ivan Boesky, who reached the heights of fame and fortune as a prominent Wall Street arbitrageur in the 1980s but was recently exposed as a fraud in an era-defining insider trading scandal, has died. He was 87 years old.
The New York Times reported his death, citing his daughter Marianne Boesky. Details were not immediately available.
As junk bonds fueled a wave of hostile takeovers, Boesky became the epitome of a shrewd speculator who made hundreds of millions of dollars on takeover bets. Later, after admitting to insider trading, Boesky became a symbol of Wall Street greed, and his elongated face and toothy grin graced the cover of Time magazine with the headline “Ivan the Terrible.” He spent two years in prison.
Mr. Boesky's case shocked Wall Street and the nation, confirming some investors' worst fears about how capital markets work.He was thought to be the model for the greedy villain Gordon Gekko, played by Michael Douglas in the 1987 film wall street. Gekko's speech in the film, in which he declares that “greed is good,” reflected Boesky's own assessment.
“Greed is okay, by the way,” Mr. Boesky told graduates of the University of California, Berkeley's business school in 1986, months before his downfall. “I want you to know this. I think greed is healthy. You can be greedy and still feel good about yourself.”
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Ivan Frederick Boesky was born in Detroit on March 6, 1937, the second child of William and Helen Boesky. His father owned a chain of local bars called Brass Rail.
At age 12, Boesky attended Cranbrook, a prestigious private academy in the Detroit suburb of Bloomfield Hills, where he fell in love with wrestling and received the “Wrestler of the Year” trophy. Despite his athletic success, he abruptly left Cranbrook before graduating and transferred to a public school.
Boesky attended Wayne State University in Detroit, the University of Michigan, and Eastern Michigan University. Although he did not complete his studies, he attended Detroit Law School and received his degree in 1964.
By then, Boesky had married Seema Silverstein, the daughter of Ben Silverstein, a Detroit real estate developer who owned properties such as the Beverly Hills Hotel. He clerked for a federal judge in Detroit, a relative of Silverstein, but was unable to find a job at one of the city's top law firms.
According to a 1993 Vanity Fair article, after his father died in 1964, Boesky took over the last remaining Brass Rail Bar, which featured topless dancers and transformed it into a ” The name was changed to “Le Club A Go Go.” Two years later, the company went bankrupt and Boesky moved to New York, where he began his new career on Wall Street.
After working for several years at a financial firm and learning the business of risk arbitrage, Boesky started his own investment fund in 1975 with $700,000 from his in-laws.
After six years of betting on stocks of active companies, he launched a new fund just in time for a wave of acquisitions that was changing the landscape of corporate America.
According to a 1984 article in The Atlantic, Boesky made more than $100 million in 1984 from Texaco's acquisition of Getty Oil and Chevron's acquisition of Gulf Oil. The following year, he made an estimated $50 million when Philip Morris acquired General Foods.
Unlike other arbitrageurs who generally avoided public disclosure, Mr. Boesky accepted it. He hired a publicist to get the media to quote him, wrote a book called Merger Mania about his experiences in high finance in 1985, and used speeches to promote it. traveled all over the country.
SEC probe
By the mid-1980s, Wall Street's bull market was making millions of dollars for shrewd investors, leading regulators to suspect that the market was being manipulated in favor of investors with inside information. I started to doubt it.
In mid-1985, the Securities and Exchange Commission began investigating suspicious transactions by two employees of Venezuela-based Merrill Lynch & Company. The deal set them on a tangled path to Wall Street fraud and ensnared Drexel Burnham investment banker Dennis Levine.Lambert Co., Ltd.
A year later, in June 1986, shortly after his arrest for insider trading, Levine pleaded guilty and agreed to cooperate with Manhattan U.S. Attorney Rudy Giuliani. Mr. Levine told federal prosecutors that he provided Mr. Boesky with nonpublic information about the potential transaction. Levine was accused of making about $12 million in illegal transactions and was later sentenced to two years in prison.
A few months later, Boesky struck a deal with the government. He is expected to plead guilty to one felony count of conspiring to submit false transaction records, paying a $100 million fine and cooperating with federal authorities.
As part of the agreement, Mr. Boesky secretly recorded conversations with traders to help the government build cases against other Wall Street figures. The most notable of them was Michael Milken, head of high-yield junk bond trading at Drexel Burnham, who financed many of the company's acquisitions at the time. Milken served nearly two years in prison for securities law violations, but was pardoned by then-President Donald Trump in 2020.
Boesky was sentenced to a maximum of five years in prison, but based on his cooperation with authorities, he was sentenced to three years in prison. He was released in April 1990 after serving approximately two years.
In a letter to a federal judge upholding the reduced sentence, prosecutors credited the financier with helping them understand the scope of Wall Street abuses, saying, “Mr. Boesky gave the government… It's a clue to the rampant criminal activity that pervades the securities industry.'' The firm was relatively unknown until Boesky began working with him in the 1980s. ”
Unlike Milken, who spent much of his post-prison life doing charity work, Boesky largely disappeared from public life after his release. In 1991, Seema Boesky filed for divorce, which was finalized two years later. The couple had four children: William, Marianne, Theodore, and John. After that, he lived with his second wife Anna.
