Word: junking
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...depressed earnings were just one sign of Wall Street's myriad woes. Drexel Burnham Lambert, the junk-bond pioneer, said last week it plans to sell its retail brokerage business, which trades for small investors, and concentrate on large institutional clients. That move and cutbacks in other divisions will slash Drexel's payroll of 9,000 employees by about one-third. In a candid statement, Drexel said "adverse publicity" about its legal problems had helped drive it from the retail market. Earlier this month the company settled a Securities and Exchange Commission suit by agreeing to fire its indicted junk...
...plunging sales as the energy-based economy declined. In many cases the loans should never have been made. Observes James Noteware, national director of real estate for the accounting firm of Laventhol and Horwath: "A lot of what the thrift institutions are passing on to the Government is really junk...
...agreement puts Drexel on probation for three years and requires it to set up an oversight committee. The firm is also naming a new chairman, former SEC head John Shad, to succeed Drexel's Robert Linton. As expected, the deal forces Drexel to cut all ties to its former junk-bond king, Michael Milken, who is facing separate criminal charges of racketeering and securities fraud. Last week Milken agreed to set aside assets of at least $600 million, which could be forfeited if he is found guilty...
...indictment was long anticipated, but the size of the proposed penalties was enough to provoke a collective gasp among Wall Streeters. Last week a federal grand jury in Manhattan charged junk-bond king Michael Milken, 42, his brother Lowell, 40, and Bruce Lee Newberg, 31, a former colleague of theirs at the investment firm Drexel Burnham Lambert, with a total of 98 felony counts of stock manipulation, insider trading, racketeering and other crimes. The indictment calls for the three accused to forfeit their total compensation of $1.5 billion for 1984 through 1987 (plus interest of $257 million) and pay fines...
Milken's unprecedented income was the result of his employment contract with Drexel, where he has been the firm's biggest source of profits as head of its Beverly Hills-based junk-bond department. Milken almost single-handedly created the junk-bond market, which has grown from $1 billion in 1981 to $180 billion last year. His downfall began three years ago, when arbitrager Ivan Boesky, collared on insider-trading charges, began singing to prosecutors about alleged stock-fraud schemes he carried out with Milken and Drexel. Last December Drexel struck a deal with prosecutors that called for the firm...