Who’s the new Drexel Burnham?
Looking into the background of some of the world’s most successful financier, you tend to spot in a lot of cases the similar background of working at DXL. From Leon Black, Ken Moelis, Rich Handler, David Solomon, Michael Mauboussin, etc etc etc etc. Not only that, but it seemed that they also hold a wide array of expertise (M&A advisory, PE, Equity Research) etc... I was wondering what are in your thoughts in 2020 the banks that are producing the same kind of talent that DXL did in its prime. Whether that be great IB’ers or the best PE associates now etc
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"Legendary" in what sense? For paying $1bn in fines and settlements and spending 2 years in jail after getting caught insider trading and breaking the law?
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What he accomplished in building a market from scratch and making wild amounts of money certainly makes him a legend, but it is also true that he hurt a ton of people in the process and that shouldn’t be ignored. Investors were left holding the bag when the HY market went belly up and they realized Milken had sold them shit for years just so he could illegally make money on every side of the deal - buying the targets stock through illegal trusts, m&a advisory fees, underwriting fees, feeding private info to hedge funds for favors, etc. Tons of his clients went bust due to Drexel deals gone bad and thousands of people lost their jobs, but he left jail a billionaire. Can’t imagine that doesn’t weigh on his conscience, hence the milken institute.
Milken I believe was only convicted for "parking stock," which I think means he agreed to buy a client's securities and sell the securities back to the client later... so that the client could avoid paying taxes on them, or mask how much of the stock the client actually owned... something to that effect. Basically, he sold junk bonds, and when that market blew up, the government made him the scapegoat and decided to go after him. So basically, yes, he technically violated securities laws, but it seems that the convictions really had very little to do with the actual junk bond market.
In reality, I believe many people feel that he was wronged -- yes, he sold junk bonds, but all along, his theory was that some of the bonds would go into default (after all, these were high risk companies -- hence, the "junk" status). But from a return-perspective, he believed that if you held a diversified portfolio of junk bonds, the high yields you'd receive on all would offset the potential default risk of some.
But the above is related to his investment theory, not his legal culpability. In this person's opinion, he was not the "scumbag criminal who ripped off a nation" that many perceive him to be; instead, he was a man who primarily did a great deal of good, but who -- yes -- apparently violated some obscure securities laws to help a client or two save some money /taxes perhaps a couple of times.