Ivan F. Boesky

Ivan F. Boesky passed away the other day at 87, and my reaction was one I sometimes have: you mean he was alive yesterday?

Anyone my age and even slightly informed will remember the name Ivan Boesky, the king of 1980s Wall Street who amassed a fortune through illegally obtained insider trading and other applications of the Black Arts of investing.

I have a friend, a retired surgeon, who is one of The Assembled at the race track. For a while he was doing so-called "day trading," trying to make money in the market through quick buying and selling. At some point he gave it up, telling me the only way to make money in the market is to have insider trading information. Ivan Boesky would have agreed, but he didn't put that in his book, "Merger Mania: Arbitrage: Wall Street's Best Kept Money Making Secret." Ivan kept the secret to himself until he couldn't, trading it for a lighter prison sentence.

If it wasn't for the above picture showing Ivan in a helicopter flying over 1980s Manhattan with the Twin Towers in view, I probably wouldn't be writing the posting. But the sight of the Twin Towers so many years after the terrorist attack and collapse, made me nostalgic for my employment in the North Tower, One World Trade Center where I worked on the 29th floor and eventually made my way down to the street on 9/11.

You only see the Towers now in old photos or old TV shows or movies where it is prominent in the background. There's a new generation growing older who have no connection to 9/11 or even knowledge of Ivan Boesky.

The print edition of the NYT for Boesky's obit had the photo in black and white, despite being their able to print in color. The online edition is always more colorful and contains photos the print edition doesn't. I look at both.

Ivan was a restless guy. He was born to make money, so eager to do so he never even finished college. At the height of his legendary gains was the buyer  of insider information in exchange for briefcases full of cash, $150,000 to $200,000 in Benjamins, usually from Mike Milken who worked on junk bonds at Drexel Burnham Lambert and on whom Boesky later informed on by wearing a wire in exchange for cooperating with the Feds. Martin Siegal, at Kidder Peabody & Company was also the recipient of Boesky's bribes.

Interesting—at least to me—was that in the mid-1960s I worked as a clerk at Burnham and Company on Broad Street for a few months. In those days, Wall Street back offices were just beginning to be computerized. Most trading was accomplished by the actual receipt of paper security certificates delivered back and forth by "runners," usually retired guys who made a few bucks. The settlement period then was 5 days.

Every generation produces scallywags, traders who skirt the rules thinking they have all the answers on how to get wealthy—filthy rich—before anyone can stop them. At his height, Ivan was boasting a $3 billion portfolio ($8.7 billion in today's money). 

Unlike Bernie Madoff, who took public money, Ivan had partners who hooked in with him for 40% of the gains, while he took 60%. They in turn had to absorb 90% of the any losses. What a sweetheart.

Boesky actually did make a graduation speech where he told his audience that "greed is healthy." Hollywood couldn't resist this guy's story and made the movie Wall Street starring Michael Douglas as Gordon Gekko (read Boesky) who makes a speech to a group of people telling them that "greed is good." It was the Gettysburg Address for investors in the 80s.

Michael Douglas won an Academy Award for Best Actor in the 1988 film that also starred Hal Holbrook, Charlie Sheen, and Darryl Hannah, Gordon's side piece.

As the Feds were closing in, Ivan chose to wear a wire when he dealt with Mike Milken, who the government wanted more than him. In exchange for  his cooperation Ivan served 18 months of a three-year sentence and paid a $50 million fine as well as agreeing to $50 million in restitution for ill-gotten gains. (He later was able to deduct $50 million from his income tax.) He spent his incarceration at what then would be called "Club Fed," a minimum security prison, Lompoc, in Santa Barbara County, California.

No mention is made in the obituary of Ivan squiring around mistresses. In 1962 he had married Seema Silberstein, whose father owned the Beverly Hills Hotel and who was wealthy in her own right. After his stint at Club Fed at 53, his wife of 30 years sued for divorce. Ivan settled.

He pleaded poverty and got from her a settlement of $20 million (down from the $100 million he originally wanted), annual payments of $180,000 and a $2.5 million California home. He remarried, lived in La Jolla, California, and had a daughter.

If I ever need one, I want his lawyer.

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