Boesky, Ivan (1937–)

Ivan Frederick Boesky, born on March 6, 1937, in Detroit, Michigan, is most well known for his involvement in a Wall Street insider trading scandal in the mid-1980s. The son of a Russian immigrant who became a top Detroit restaurateur and graduate of the Detroit School of Law, Boesky landed on Wall Street in 1966 as a stock analyst. With the assistance of his father-in-law, the real estate magnate Ben Silberstein, Boesky started his own arbitrage firm in 1975.

Throughout the early 1980s, Boesky, working as an arbitrage specialist and known affectionately as “Ivan the Terrible,” amassed a fortune estimated at approximately $200 million by betting on corporate takeovers and mergers. Boesky, along with other corporate financiers such as T. Boone Pickens and Sir James Goldsmith, took advantage of the gap between public and private market values to raid corporate targets, a legal enterprise as long as the trading in the targets securities was based on public knowledge of the imminent acquisitions. During this time, the U.S. Securities and Exchange Commission (SEC) investigated Boesky for engaging in certain investments based on tips received from corporate insiders regarding [Page 185]potential takeover targets. Boesky acquired securities in various companies based on insider tips, often with significant purchases made only days before a corporation publicly announced a takeover, resulting in substantial returns for Boesky when the news of the pending takeover was released.

While use of such insider information to trade in public securities was illegal, the SEC until this point had rarely engaged in enforcement proceedings for insider trading. In November 1986, Boesky, as a result of an SEC investigation into illegal insider trading on Wall Street, pled guilty to one felony count of manipulating securities and agreed to cooperate with the SEC in its ongoing investigation. Boesky, in return for leniency, allowed the SEC to secretly tape his conversations with various corporate insiders and takeover specialists, including junk bond trader Michael Milken. Boesky's cooperation led to an insider trading probe of Milken and his firm Drexel Burnham Lambert, resulting in both Drexel and Milken later entering guilty pleas to securities law violations.

As a result of his plea agreement and cooperation with the SEC, Boesky received a sentence of 31/2 years in prison, a $100 million fine, and a permanent ban from working in the securities industry for the remainder of his life. Boesky, who served his time at the Lompoc Federal Prison Camp in California, was released from prison after serving 2 years.

The actions by Boesky and others (including Milken) are viewed as emblematic of the greed and excesses critics argue marked the 1980s on Wall Street. Prior to his guilty plea, Boesky gave an infamous speech at the University of California in 1986 extolling the positive aspects of greed, stating that he thought greed was healthy. Boesky's statements inspired the key speech by the fictional character Gordon Gekko (played by Michael Douglas) in the 1987 movie Wall Street claiming that greed was good.