Securities and Exchange Commission Historical Society

Wrestling with Reform: Financial Scandals and the Legislation They Inspired

Manipulating Markets, Making Law: ITSFEA of 1988

The Case Against Boesky

- July 10, 1985 Inscription to Dennis Levine from Ivan Boesky, within a copy of “Merger Mania”

Concern about insider trading dominated the early 1980s.  The U.S. Securities and Exchange Commission and the Supreme Court sparred over how to rein it in.  The Court’s decisions in Chiarella v. United States and Dirks v. SEC raised questions about what defined insider trading and limited SEC authority over it.  The Insider Trading Sanctions Act of 1984 sought to clarify the law and further empowered the SEC, providing for triple damages and raising the maximum criminal fine to $100,000.  It did not, however, define insider trading; the SEC believed that doing so would invite crafty traders to exploit loopholes.

A year later, the SEC and U.S. Attorney Rudolph Giuliani began pulling threads from a tangle of fraud and insider trading.  A tipster fingered Dennis Levine, architect of a $12 million insider trading ring.  Levine’s cooperation led authorities to Ivan Boesky, one of Wall Street’s leading arbitrageurs.  Boesky had worked his way up from Wall Street trainee to running his own firm.  He was in good position to extract profits from the 1980s takeover boom through corruption and collusion, by using insider information to time trades and by working with investors to manipulate the market.  Boesky eventually received $3 billion in financial leverage from Michael Milken.  Together, Boesky and Milken committed infractions ranging from 13-D violations to conspiracy and market manipulation. (26)

As investigators closed in, Boesky cut a deal, accepting a $100 million fine and turning government witness.  Boesky tutored investigators in takeover bids, stock manipulations, and corporate raids. He also recorded calls and meetings with associates, most importantly an October 1986 conversation with Michael Milken which provided proof of their illegal arrangements.  On November 14, after two months of undercover work, the government revealed its case against Ivan Boesky.


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Footnotes:

(26) James B. Stewart. Den of Thieves (New York: Simon & Schuster, 1992), 40-46, 234, 237, 324. April 23, 1987 United States of America v. Ivan Boesky – Information

Related Museum Resources

Papers

September 17, 1986
image pdf (Courtesy of the National Archives and Records Administration)
April 23, 1987
image pdf (Courtesy of the National Archives and Records Administration)
April 23, 1987
image pdf (Courtesy of the National Archives and Records Administration)
April 23, 1987
image pdf (Courtesy of the National Archives and Records Administration)
May 1, 1987
image pdf (Courtesy of the National Archives and Records Administration)
May 24, 1987
transcript pdf (Courtesy of the National Archives and Records Administration)
June 4, 1987
image pdf (Courtesy of the National Archives and Records Administration)
June 4, 1987
image pdf (Courtesy of the National Archives and Records Administration)
June 11, 1987
image pdf (Courtesy of the National Archives and Records Administration)
June 15, 1987
image pdf (Courtesy of the National Archives and Records Administration)
June 17, 1987
image pdf (Courtesy of the National Archives and Records Administration)
June 25, 1987
image pdf (Courtesy of the National Archives and Records Administration)
July 23, 1987
transcript pdf (Courtesy of the National Archives and Records Administration)
September 15, 1987
image pdf (Courtesy of the National Archives and Records Administration)
September 16, 1987
transcript pdf (Courtesy of the National Archives and Records Administration)
September 17, 1987
transcript pdf (Courtesy of the National Archives and Records Administration)
September 25, 1987
image pdf (Courtesy of the National Archives and Records Administration)
September 28, 1987
image pdf (Courtesy of the National Archives and Records Administration)
September 28, 1987
image pdf (Courtesy of the National Archives and Records Administration)
October 1, 1987
transcript pdf (Courtesy of the National Archives and Records Administration)
October 1, 1987
image pdf (Courtesy of the National Archives and Records Administration)
October 4, 1987
transcript pdf (Courtesy of the National Archives and Records Administration)
October 5, 1987
image pdf (Courtesy of the National Archives and Records Administration)
October 6, 1987
image pdf (Courtesy of the National Archives and Records Administration)
October 7, 1987
image pdf (Courtesy of the National Archives and Records Administration)
October 8, 1987
image pdf (Courtesy of the National Archives and Records Administration)
October 9, 1987
image pdf (Courtesy of the National Archives and Records Administration)
October 12, 1987
image pdf (Courtesy of the National Archives and Records Administration)
October 12, 1987
image pdf (Courtesy of the National Archives and Records Administration)
October 13, 1987
image pdf (Courtesy of the National Archives and Records Administration)
October 14, 1987
image pdf (Courtesy of the National Archives and Records Administration)
October 14, 1987
image pdf (Courtesy of the National Archives and Records Administration)
October 15, 1987
transcript pdf (Courtesy of the National Archives and Records Administration)
October 21, 1987
image pdf (Courtesy of the National Archives and Records Administration)
November 2, 1987
image pdf (Courtesy of the National Archives and Records Administration)
November 3, 1987
image pdf (Courtesy of the National Archives and Records Administration)
November 12, 1987
image pdf (Courtesy of the National Archives and Records Administration)
November 16, 1987
transcript pdf (Courtesy of the National Archives and Records Administration)
November 18, 1987
image pdf (Courtesy of the National Archives and Records Administration)
December 3, 1987
transcript pdf (Courtesy of the National Archives and Records Administration)
December 11, 1987
image pdf (Courtesy of the National Archives and Records Administration)
December 11, 1987
image pdf (Courtesy of the National Archives and Records Administration)
December 11, 1987
image pdf (Courtesy of the National Archives and Records Administration)
December 14, 1987
transcript pdf (Courtesy of the National Archives and Records Administration)
December 14, 1987
image pdf (Courtesy of the National Archives and Records Administration)
December 15, 1987
image pdf (Courtesy of the National Archives and Records Administration)
December 16, 1987
transcript pdf (Courtesy of the National Archives and Records Administration)
December 16, 1987
image pdf (Courtesy of the National Archives and Records Administration)
December 17, 1987
image pdf (Courtesy of the National Archives and Records Administration)
December 18, 1987
image pdf (Courtesy of the National Archives and Records Administration)
December 18, 1987
image pdf (Courtesy of the National Archives and Records Administration)
December 18, 1987
image pdf (Courtesy of the National Archives and Records Administration)
December 18, 1987
transcript pdf (Courtesy of the National Archives and Records Administration)
April 15, 1988
image pdf (Courtesy of the National Archives and Records Administration)
April 15, 1988
image pdf (Courtesy of the National Archives and Records Administration)
April 22, 1988
image pdf (Courtesy of the National Archives and Records Administration)
April 12, 1989
image pdf (Courtesy of the National Archives and Records Administration)
April 12, 1989
image pdf (Courtesy of the National Archives and Records Administration)
April 13, 1989
image pdf (Courtesy of the National Archives and Records Administration)
April 13, 1989
image pdf (Courtesy of the National Archives and Records Administration)
April 27, 1989
image pdf (Courtesy of the National Archives and Records Administration)
September 13, 2004
image pdf
August 11, 2006
document pdf (prepared for the museum by Stuart J. Kaswell)

Oral Histories

19 July 2006

Gary Lynch

17 November 2009

Robert Marchman

05 March 2012

William McLucas

Video: 10:48

Bill McLucas served at the SEC for 21 years, the last 9 as director of the Division of Enforcement. He started as a staff attorney in 1977 and became branch chief under Stanley Sporkin. He then rose through the ranks in the Enforcement Division as assistant director, associate director, and became director of the Division in 1989. In his oral history interview, he discusses what it was like to serve under directors Sporkin and Fedders, and for five SEC Chairmen as division director, and how the SEC’s enforcement program evolved over his time at the SEC, and since his departure from the agency in 1998. Mr. McLucas was a founding trustee of the SEC Historical Society.

14 July 2006

John Sturc

Galleries

Fair To All People: The SEC and the Regulation of Insider Trading
Chasing the Devil Around the Stump: Securities Regulation, the SEC and the Courts

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