Word: sec
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Dates: during 1980-1989
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...based Ivan Boesky, one of Wall Street's richest and most frenetically active individual speculators, had been snared in the biggest insider-trading case ever. In a consent decree Boesky, 49, had agreed to pay $100 million, which Shad described as "by far the largest" settlement obtained by the SEC for insider-trading activity. After a 16 1/2-month transition period in which Boesky will gradually dispose of his holdings, he will be barred for life from stock trading in the U.S. The tall, impeccably tailored Wall Street superstar has agreed to plead guilty to a single, unspecified criminal charge. Said...
Something momentous already had. At a single stroke the SEC had written finis to one of Wall Street's most spectacular and controversial careers, built up in little more than a decade. The federal agency had also taken a mammoth stride forward in the insider-trading investigation that first exploded last May, when the SEC filed a civil complaint against Dennis Levine, a former managing director of the Drexel Burnham Lambert investment banking firm, and charged him with illegal trading in 54 stocks. Levine subsequently pleaded guilty to four criminal charges and gave up $10.6 million in illegal profits...
...SEC's huge judgment could have a further chilling effect on the speculation that has swept the high-tech, high-volume stock market of the '80s. Boesky (pronounced Boe-ski), the son of a Russian immigrant, often played a central role in the dealmaking. His career was based on the high- rolling game known as risk arbitrage -- the opportunistic buying and selling of stocks in companies that appear on the verge of being taken over by other firms. The prices of those securities generally surge, giving arbitragers the chance to make swift profits...
Boesky always insisted that he bought stocks only after formal takeover bids were announced. But the SEC has shown that he and others often obtained advance tips from investment bankers about what deals were in the works and then used the information to make illegal trades. Says Investor William Simon, who was Treasury Secretary under Richard Nixon: "If anybody ever had any doubts that the authorities were serious about the issue, this ought to put those doubts to rest...
...tinkering is tried, current stock-market trends cannot be entirely reversed. Some of the benefits that computerized trading confer on institutional investors vs. individual investors are permanent. One of those advantages is the ability to buy and sell entire portfolios of stock at once, rather than individual issues. Admits SEC Commissioner Joseph Grundfest: "One of the wonderful things about Wall Street has been that the small investor could lay the same bets as the big boys. Now you might need $9 million to play." He adds, "If you're not computer sophisticated, you're behind the eight ball...