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Table of Contents

Ivan Boesky

Ivan Boesky is a renowned American arbitrageur who came to epitomize the motto "greed is good" during the financial excess of the 1980s. A major player in the hostile takeover and junk bond craze, his words partly inspired the fictional character Gordon Gekko in Oliver Stone's movie, Wall Street.

In 1987, Boesky was sentenced to three years in prison for his role in an insider trading scandal. A year earlier, Boesky had cut a deal with investigators, agreeing to turn government witness and pay a $100 million penalty to the Securities and Exchange Commission (SEC).

Key Takeaways

  • Ivan Boesky is a former investment banker who was convicted of insider trading in 1987 and sentenced to three years in prison.
  • As part of a deal with investigators, Boesky informed on a number of his associates and agreed to pay a $100 million fine to the SEC.
  • Boesky made his money by investing in the stocks of companies that were primed for takeover. 
  • He embodied the 1980s junk bond boom, in which leveraged buyouts of companies were financed by junk debt, and a life of excess and greed were the norm.
  • As a result of his actions, Boesky is permanently banned from operating in the financial services industry.
Ivan Boesky

Investopedia / Alex Dos Diaz

Early Life and Education

Ivan Boesky was born in 1937 to Russian immigrant parents. His father was a prominent businessman, owning several restaurants and bars in Detroit, Michigan. At age 25, Ivan married Seema Silberstein, the daughter of a wealthy family⁠—a move many, including his father, say was prompted by greed.

In 1964, Ivan obtained a law degree from the Detroit College of Law and shortly thereafter began working as a law clerk. In 1966, he and his wife moved to a Park Avenue apartment in New York City, courtesy of Seema's father.

Notable Deeds

Ivan rose to power and fame as the world's leading takeover arbitrageur and made a fortune investing in stocks of companies that were takeover targets. He was unapologetic about the pursuit of money. In 1986, in a commencement speech at the business school at the University of California Berkeley, Boesky said: "Greed is all right, by the way. I want you to know that. I think greed is healthy. You can be greedy and still feel good about yourself." It was a line that would be immortalized by Gordon Gekko.

It was message that chimed with the neoliberal economic policies of Ronald Reagan and Margaret Thatcher. Corporate takeovers and downsizing were just the tickets for restructuring ossifying and highly unionized old industries. Boesky was, for a time, feted by the financial media, and his gospel of greed was much in demand on the speaking circuit. However, Boesky was considered nouveau riche, known for conspicuous consumption but not necessarily good taste.

Crime

In 1986, Boesky suffered a spectacular fall from grace when he was implicated in fraud and insider trading by Dennis Levine, who was cooperating with SEC investigators and U.S. Attorney Rudolph Giuliani. Boesky was accused of using insider information to time trades and manipulate the market. He cut a deal with investigators, agreeing to gather evidence against his associate, junk bond king Michael Milken, and pay a $100 million fine.

Drexel had fueled the leveraged buyout boom through junk bonds and was famous for its predators' ball, an investment gala for corporate raiders, and financiers.

Tarnished Legacy

It was the end of an era of roaring corporate takeover activity and leveraged buyouts funded by junk debt. If all the raiders and junk bond traders were engaged in illegal activity, who would buy all these companies at their inflated prices?

In 1987, Boesky was given a relatively light sentence of three years in prison, with the judge citing his cooperation with authorities. Milken was originally sentenced to 10 years in prison (later amended to to less than two years) and fined $200 million. In 2020, President Donald Trump granted Milken a full and unconditional pardon.

Following the insider trading scandal, Congress increased the penalties for securities violations when it passed the Insider Trading Act of 1988. Boesky never recovered his reputation and was permanently barred from working in the securities industry.

Personal Life

After his release, Boesky and his wife divorced, and he moved to California with a $23 million divorce settlement. He adopted a modest lifestyle, fueled by service, rather than greed. Withdrawn from the limelight, he embarked on a quest to become a rabbi and help people experiencing homelessness.

What Laws Did Ivan Boesky Break?

Ivan Boesky was convicted of insider trading and was subsequently sentenced to three years in prison and ordered to pay $100 million in fines.

How Did Ivan Boesky Make His Money?

Boesky earned millions investing in stocks of companies targeted for hostile takeovers. He also earned money by engaging in insider trading.


How Much Is Ivan Boesky Worth?

At the height of his career, Ivan Boesky was worth more than $200 million. After paying $100 million in fines to the SEC and not being able to work in a career that afforded his wealth, it is unknown how much he is worth today.

The Bottom Line

Ivan Boesky is a first-generation American businessman who earned millions in junk bonds and stocks of hostile takeover target companies. Lured by greed, Boesky engaged in insider trading to inflate his pockets, which ultimately landed him in prison and heavily fined. After serving three years, Boesky returned to a tarnished reputation, a broken marriage, and a career he could no longer enjoy. He later moved to California with his multi-million-dollar divorce settlement and pursued a life opposite to what he once lived. He now dedicates his time to serving others in need.

Article Sources
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  1. U.S. Securities and Exchange Commission Historical Society. "Manipulating Markets, Making Law: ITSFEA of 1988 - The Case Against Boesky."

  2. United States District Court, Southern District of New York. "United States of America v. Ivan F Boesky," Pages 3 and 29.

  3. Insider. "Meet Ivan Boesky, The Infamous Wall Streeter Who Inspired Gordon Gekko."

  4. Robert M. Collins. "Transforming America: Politics and Culture During the Reagan Years," Pages 95-96. Columbia University Press, 2009.

  5. U.S. Department of Justice. "Executive Grant of Clemency - Michael Robert Milken," Page 1.

  6. U.S. Congress. "H.R.5133 - Insider Trading and Securities Fraud Enforcement Act of 1988."

  7. CNBC. "Meet Ivan Boesky, the 1980s Wall Street titan who inspired Hollywood - and ended up in jail."

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