Remembering Ivan Boesky
Ivan Boesky passed away on May 20, 2024. For those who don’t know the story and don’t remember the go-go 80s, Ivan Boesky was a “brash” Risk Arbitrage trader who made hundreds of millions before dramatically falling due to a widespread insider trading ring.
As remembered in the New York Times, Mr. Boesky made a fortune buying and selling stocks in companies that appeared to be takeover targets. Often these were stock tips passed to him illegally in exchange for suitcases of cash. Mr. Boesky was an inspiration for the Gordon Gekko character in Oliver Stone’s movie “Wall Street”.
He pled guilty to “insider trading in November 1986, (spent 22 months in prison) and was fined $100 million, a record at the time, that sent shock waves through Wall Street and set off a cascade of events that marked the end of a decade of (LBO’s) and the celebration of conspicuous wealth.” Facing legal pressure from the DOJ and SEC, Ivan Boesky chose to cooperate, providing crucial information that led to the collapse of investment bank Drexel Burnham Lambert and the downfall of “junk bond king” Michael Milken.
Boesky embodied the rampant financial ethos of the era. In a 1986 commencement speech at UC Berkeley, he famously declared, “Greed is all right, by the way. I think greed is healthy. You can be greedy and still feel good about yourself.” His words were met with enthusiastic applause. A year later, those sentiments were echoed on the big screen. In the film “Wall Street,” the unscrupulous corporate raider Gordon Gekko (played by Michael Douglas) delivered his iconic “Greed is Good” speech.
By 1986, the walls were closing in on Ivan Boesky. In May, a Drexel banker named Dennis Levine was indicted on insider trading charges, and federal prosecutors discovered Boesky’s name in his notes as a recipient of illegal tips. A young and ambitious Rudolph W. Giuliani, then the U.S. Attorney for the Southern District of New York, was hot on Boesky’s trail.
The insider trading cadre of Boesky, Milken, Siegel, Levine, et al led the US Congress and the SEC to adopt the Insider Trading Fraud and Enforcement Act of 1988 (“ITSFEA”), which is the seminal regulation for Compliance teams and requires firms to have adequate policies and procedures to prevent and detect insider trading.
Why is it important to remember a person who was convicted of insider trading? So, we can learn from his mistakes. That while some may think “greed is good” it doesn’t mean that insider trading is right.
Why is it important to remember a person who was convicted of insider trading? So, we can learn from the history of our mistakes. While some may think “greed is good” it doesn’t mean that insider trading is right. To learn more about the history of employee regulatory compliance and how technology and regulators have joined forces to combat market abuse, download our quarterly executive brief.
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