Den of Thieves | James B. Stewart

Summary of: Den of Thieves
By: James B. Stewart

Introduction

In ‘Den of Thieves,’ author James B. Stewart dives into the shocking financial crimes that rocked Wall Street in the 1980s, exposing the twisted world of insider trading and market manipulation during this dark era. The summary takes you through the stories of notorious personalities such as Michael Milken, Ivan Boesky, and Dennis Levine, revealing their motivations, tactics, and ultimate downfall. The book traces the rise of these figures, the impact their crimes had on the market, and the role of regulators in exposing and prosecuting these massive frauds. Prepare to be enthralled by the incredible details of some of the biggest financial crimes in history as you discover how greed, corruption, and power intertwined to create the perfect storm that would shape global finance forever.

Wall Street’s Decadent Days

The book highlights the greed and market manipulation that shook Wall Street in the 1980s, leading to some of the biggest financial crimes ever committed. The scandals that ensued were shocking due to their sheer size, the pervasiveness of the crimes, and the gratuitousness of the greed. Fuelled by junk bonds, companies and financiers embarked on a wave of hostile takeovers, leading to irrational stock prices and dismantling of acquired companies. The era marked a low point for Wall Street and raised concerns about insider trading and market manipulation.

Wall Street’s biggest scandal

This summary tells the story of Dennis Levine, the man who indirectly exposed the massive insider trading scandal that rocked Wall Street in the 1980s. Despite his lack of basic financial skills, Levine was a master of spotting other Wall Streeters who were insecure and greedy enough to be drawn into an insider scheme.

Levine’s career began in Citicorp in the 1970s but he was passed over for a promotion and soon joined Smith Barney, where he landed a plum assignment in Paris. However, Levine felt too far from the action and set up an anonymous Swiss bank account for trading on insider tips. He recruited merger tip-off moles at other investment banks, including Goldman Sachs.

Levine bought 27,000 shares of Citron and convinced them to hire Lehman to represent them in the bid, netting Lehman a $2.5 million fee. Before telling his new bosses, Levine cashed in those shares for a $212,628 profit. Levine and his cronies continued such trades over the next several years, while Levine amassed millions in a Swiss bank account in the Bahamas.

Levine joined Drexel Burnham Lambert’s New York office in 1985 as a deal maker and was promised a base salary of $140,000 and a guaranteed bonus of at least $750,000, plus 1,000 shares of Drexel stock. However, his high-flying days were numbered. In May 1985, an anonymous letter reported that brokers in Venezuela were trading illegally on insider information. Merrill Lynch investigated and fired the brokers but turned the tip over to the SEC. SEC investigators soon tied the insider tips to Levine’s ring and began questioning the banker.

Levine’s eerily prescient trading had attracted regulatory attention before, but he had managed to lie his way out of trouble. This time, though, the SEC turned up the pressure on Levine’s Swiss bankers in the Bahamas, who revealed his identity. Levine then ratted out his insider-trading ring cronies, and investigators found Boesky’s telephone number in his papers.

In 1987, Levine was sentenced to two years in prison and was ordered to cough up $362,000, in addition to the $11.6 million he turned over to the SEC. Wilkis served eight months in prison. The scandals that engulfed Wall Street in the 1980s might have gone undetected if not for the careless crimes Levine committed.

Boesky, Milken, and the Art of Insider Trading

This book snippet delves into the world of insider trading in the 1980s, where renowned trader Boesky sought an edge to boost his returns by asking Kidder, Peabody investment banker Siegel for insider information. Boesky and his trading profits were inextricably linked to Michael Milken, the junk-bond king, who controlled not only the junk-bond market but also Boesky. Their relationship involved secret deals that allowed Milken’s clients to buy junk bonds from their customers at artificially low prices. Boesky, terrified of Milken, agreed to wear a wire when he met with him and agreed to pay the government $100 million, significantly less than his actual illegal gains.

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