So the department managed to coerce Milken to plead guilty to trivial offenses. Was there a fine? By the mid ‘s Milken had become the most storied financier on Wall Street, his high-yield bonds had ignited an American business revolution, and the firm, now known as Drexel Burnham Lambert, was launched to the apex of American finance. Other defendants in cases similar to Milken’s fought charges for as long as a decade, and eventually prevailed. Milken, financially able to afford the settlements and concerned about the stress on his family, felt his time would be better spent on efforts such as helping address America’s serious education, medical research and public health issues – instead of spending a decade in court. There was a strong reaction from the establishment through their Congressional representatives and on the editorial pages of major newspapers. He formalized his individual efforts in early when he was relatively unknown to the general public with the formation of the Milken Family Foundation, which was endowed with several hundred million dollars.

Culture, fiction and Milken. M ilken financing and job creation. Success through good times and bad depends on building a strong capital structure that limits risk where business conditions are volatile. And when markets tell companies it’s time to deleverage following an economic downturn, the companies have no one to blame but themselves if they fail to change their balance sheets. That revolution broke the stranglehold of “establishment” lenders and shifted power from non-stockholder corporate managements to stockholders.

In Aprilthe lead prosecutor, assistant U. He showed up in people’s offices with suitcases full of cash. Manne, called takeovers “the most powerful market mechanism for displacing bad managers Most of the plot bore no resemblance to historical facts.

What Went Wrong: An Examination of Drexel Burnham Lambert’s Descent into Bankruptcy

Even with some of Wall Street’s biggest guns angling to become more influential in low-rated bond trading and underwriting, Milken claims he doesn’t feel the pressure. It’s no surprise Milken was introduced at an investment firm’s executive retreat as “the father of modern capital markets” and “the man who created modern private equity.


This ignores the fact that his philanthropy started two decades before he was diagnosed with cancer in This is an example of what academics call “the agency problem,” which removes incentives to use stockholders’ assets efficiently. There is no “one right way” to capitalize a corporation, Milken has repeatedly said, nor can any single financial structure be correct at all times. Home and many others. A Broadway play that fictionalized the activities of Wall Street financiers in the s purported to be “inspired” by events in Milken’s life.

Michael Milken – Myths

Furthermore, the magnitude of the scandal and the prominence of Drexel Burnham Lambert have resulted in the perpetual tying of Drexel’s fate to the insider trading crimes of the s.

Hearing the prosecution’s determined efforts, the judge said they had failed to prove the more serious charges. The majority of the Milken family wealth, however, has been earned since the mids.

michael milken wharton thesis

Steven Rosenberg, who reported a major breakthrough in the development of successful gene therapy that for the first time in history harnesses the body’s own immune system to shrink tumors; Dr. Both had every reason to destroy him if they could.

michael milken wharton thesis

Glib references to the “junk bond king” perpetuate a one-dimensional caricature of a multi-dimensional financial innovator. Their share of the market declined wharotn Milken financed thousands of below-investment-grade companies.

By the late s, Milken had made major strides in democratizing capital access for below-investment-grade mihcael and entrepreneurs. These are companies that literally built the American dream, and Milken drove their industry. If they want you, they will get you. For the next 14 hours or so, he quarterbacks a team of more than 50 analysts, traders, and salespeople from the center of a large, X-shaped trading desk.


Owen Witte, whose subsequent work provided the basis for the development of the breakthrough drug Gleevec, now used as a frontline therapy for patients with chronic myelogenous leukemia; Dr.

Milken’s impact on the economy. Before Milken, the greatest financier had been J. Wall Street events in the s and today.

michael milken wharton thesis

So the department managed to coerce Milken to plead guilty to trivial offenses. He originally faced a count indictment including insider trading chargeswhich the Justice Department knew would mmilken stick. Beneficiaries of Milken’s philanthropy. But he recognized that in a changing society, “The Best Investor is a Social Scientist” the title of his first talk on Wall Street in In the early days, Milken worked long and hard out of Philadelphia and, later, New York, as a bond analyst, researching more than 2, issues — many of them the downgraded bonds of ailing conglomerates.

And then he discovered he could use that on Wall Street. Milken showed it was possible to align the interests of all corporate stakeholders – investors, entrepreneurs, debtors, creditors, consumers, management, employees and society – to create jobs, wealth and economic growth.

This type of non-disclosure has never before – nor has it since – been mmichael subject of a criminal prosecution.

He first said this while still a student at Wharton in the s.