Word: drexel
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Dates: during 1980-1989
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...fact, the agreement was a stunning about-face by the most influential, go-go investment-banking house of the 1980s. After maintaining for two years that Drexel had done nothing wrong, a shaken board of directors voted 16 to 6 to accept the stiff terms proposed by Rudolph Giuliani, U.S. Attorney for the Southern District of New York. The deal calls for Drexel to plead guilty to six felony counts involving mail, wire and securities fraud and to pay a record $650 million in penalties. Some $300 million of the fine would go to the Government, which has spent...
...return, Giuliani agreed to drop his stated plan to bring racketeering charges that could have crippled Drexel, the fifth largest U.S. securities firm. Before the deal can be completed, however, Giuliani stipulated, a 184- page civil complaint that the Securities and Exchange Commission brought against Drexel in September must be settled by Jan. 10. The SEC could conceivably ask for a larger pool of money to compensate alleged victims, who range from ordinary stockholders to Drexel's clients. Even so, Giuliani declared Drexel's fines and concessions "appropriate punishment." He added, "You do not put corporations in prison...
...Giuliani is expected to try to put at least one Drexel employee behind bars. In perhaps its most humiliating cave-in, Drexel agreed to cooperate with the Government investigation of Michael Milken, the financial wizard who created the market for high-yielding junk bonds (total now held: $180 billion) and who remains the ultimate target of Giuliani's probe. Milken, who was not represented in the settlement talks, is expected to be indicted in Manhattan sometime in January...
...senior officer at Drexel, Milken was the chief architect of the firm's rise from a lackluster, second-tier brokerage into a feared and envied powerhouse. By developing the use of junk bonds to stake such corporate raiders as Saul Steinberg and T. Boone Pickens, Milken presided over the radical reshaping of American industry in the past ten years. Along the way, dozens of Drexel executives became multimillionaires...
...Drexel's very success led to its comeuppance. As in a Greek tragedy, the company seemed to suffer from an overabundance of hubris that concealed a fatal flaw. In Drexel's case, it was Milken's growing appetite for power and control. The turning point came in November 1986 when Ivan Boesky, a notorious Wall Street speculator, pleaded guilty to a single count of securities fraud and agreed to pay $100 million to settle SEC charges that he had used insider information to buy and sell stock. Boesky, who is serving a three-year term in a minimum-security prison...