Imprisoned, fined and banned from working in the stock market, Milke received “clemency” from Donald Trump
Known as the “king of junk bonds,” Michael Milken, this week received forgiveness from US President Donald Trump as part of a series of pardons and commutations to influential characters who committed “neck and tie crimes. “
On the list of beneficiaries of Trump’s “clemency” are former Governor Rod Blagojevich, convicted in 2011 for trying to sell for his own benefit the seat vacated by Barack Obama in the Senate, and Bernad Kerik, former commissioner of the City Police of New York who pleaded guilty to charges related to fraud and conspiracy.
Milken, one of the call icons “Decade of greed” in the 80s, he participated in the creation of a high yield bond market, colloquially known as “junk bonds,” when he was an executive at the investment bank Drexel Burnham Lambert.
At one point he became the highest paid man in the history of Wall street, and his fame led him to inspire the creation of the villain of the 1987 film “Wall Street”, Gordon Gekko.
In 1990 Milken pleaded guilty to six charges related to fraud, price manipulation and tax evasion.
He was fined $ 600 million and sentenced to 10 years in prison, although he was released after serving two years of his sentence after cooperating with government investigators.
At 73, Milken is banned from working for life in the securities industry.
“A sensational job for the world”
In announcing forgiveness, Trump said Milken did “a sensational job for the world, with all his research on cancer.”
After leaving prison, Milken survived a prostate cancer and reinvented his public profile as a philanthropist, donating millions of dollars to scientific research to fight the disease.
He also founded the Milken Institute, a non-profit organization that studies economic policies and organizes a conference every year in Beverly hills attended by political and influential figures in the world of finance.
Some analysts have described the meeting as a kind of modern version of what was once a convention organized by the investment bank Drexel Burnham Lambert, informally known as “The Dance of Predators” (Predators ’Ball), where entrepreneurs and investors met to do high-risk business and plan hostile acquisitions using junk bonds.
The rise of junk bonds
Milken’s rise behind an X-shaped desk in Beverly Hills was so great that it fueled the rise of junk bonds.
And his fall was so abrupt that it helped turn it into the symbol of a controversial Wall Street era.
As head of the Drexel Burnham Lambert Bond Department in the late 1970s, Michael Milken promoted the idea of the great potential of these financial instruments with a high risk of default, but which have a high return.
In other words, with junk bonds investors lend money to companies (or a country) with a low credit rating in exchange for high interests.
At that time interest rates were very volatile and many companies sought to solve their capital problems with the issuance of corporate bonds.
Milken proposed to build a Secondary market for the issuers of junk bonds and financing in case of financial difficulties.
For each renegotiated bond in this market, Drexel Burnham Lambert charged a commission that led her to become one of the most profitable Wall Street firms in the 1980s.
And Milken, in addition to earning commissions, invested his own money in funds that in turn invested in business acquisitions.
However, as of 1987 the first investigations by the presumed began insider trading in the bank’s operations, until the financial scandal that led Milken to jail and the bank to bankruptcy finally broke out.
In the comments that accompanied the pardon granted by Trump, the White House Press Secretary, Stephanie Grishamhighlighted the “Innovative work” from Milken, which allowed “smaller players to access the financing they need to compete.”
“At the height of his financial career, Milken was charged in an accusation that pointed out that some of his innovative financing mechanisms were in fact criminal schemes,” Grisham explained, somehow defending the honor of a man who became famous for representing a time of Wall Street that few will forget.
Now you can receive notifications from BBC Mundo. Download the new version of our app and activate them to not miss our best content.
– .
