Business Insider India has updated its Privacy and Cookie policy. We use cookies to ensure that we give you the better experience on our website. If you continue without changing your settings, we\'ll assume that you are happy to receive all cookies on the Business Insider India website. However, you can change your cookie setting at any time by clicking on our Cookie Policy at any time. You can also see our Privacy Policy.
Inside the life of Michael Milken, the prominent former Wall Street financier who was pardoned by President Trump over insider trading charges from the 1980s
Inside the life of Michael Milken, the prominent former Wall Street financier who was pardoned by President Trump over insider trading charges from the 1980s
Debanjali BoseFeb 20, 2020, 01:20 IST
Paul Bruinooge / GettyMichael Milken is one of Wall Street's best-known, and most controversial, figures.
Milken was an innovator in the use of riskier high-yield bonds, or "junk bonds," which paid a higher interest rate than standard investment-grade bonds because of their lower credit ratings, stemming from a perceived higher risk.
A superstar on Wall Street in the 1980s, Milken was indicted on charges of insider trading in 1989. He ultimately pleaded guilty to six felony charges of securities fraud and spent 22 months in prison.
Milken become a philanthropist after getting out of prison, and donated money to cancer research following his own diagnosis in 1993. Even though he was given 18 months to live at the time, he made a full recovery.
Commenting on Milken's pardon, President Trump said, "He paid a big price; paid a very tough price. But he's done an incredible job." Press Secretary Stephanie Grisham called the charges against him "truly novel."
Born to Jewish parents in California, Milken is a graduate of the University of California, Berkeley, and has an MBA from the University of Pennsylvania's Wharton School of Business. He's married to his high school sweetheart.
After graduating from Wharton, he started working at Drexel Burnham Lambert, where his work popularizing the use of high-yield bonds, popularly known as "junk bonds," transformed Drexel into one of the largest banks on Wall Street. Drexel filed for bankruptcy in 1990, shortly after Milken's conviction; it is now defunct.
At Drexel Burnham, Milken provided funding to companies that had previously been unable to secure funding through standard investment-grade bonds. Neither junk bonds nor leveraged buyouts were invented in the 1980s, but Milken was a key figure in expanding their use on Wall Street during the decade.
Milken helped provide funding to news industry pioneers like Ted Turner, founder of CNN; Rupert Murdoch, founder of News Corp; and Craig McCaw, a cell phone industry entrepreneur.
One of the many businessmen to get in on the junk-bond fun in the go-go '80s was President Trump, who issued almost $700 million in junk bonds with a 14% interest rate to finish construction on his Taj Mahal casino in Atlantic City, New Jersey.
Milken's '80s-era heyday coincided with the emergence of a new breed of investors on Wall Street, many of whom are still active today, such as Carl Icahn and Ronald Perelman.
At one point, Milken's compensation amounted to $500 million in one year and more than $1 billion over a four-year stretch.
Milken's compensation was brought up when then-U.S. Prosecutor Rudy Giuliani charged Milken with "racketeering, insider trading, and securities fraud." Milken pleaded guilty to six charges, and was sentenced to 10 years in prison. He served just short of two years and paid over $1 billion in penalties.
Milken became a philanthropist after his release from prison. The Milken Family Foundation has donated more than $1 billion, and has raised $75 million for cancer research. Milken also launched and sits on the board of the Prostate Cancer Foundation.
After being permanently barred from the securities industry in 1991, the SEC accused Milken of violating his lifetime ban by offering advice to Rupert Murdoch and Ronald Perelman. Milken settled the SEC complaint for $47 million in 1998; no new criminal charges were brought against him.
Milken sought a pardon from President Bill Clinton before he left office in 2001 but the move faced strong opposition from law enforcement and was, ultimately, unsuccessful.
President Trump granted Milken clemency in February 2020. A statement from the White House Press Secretary highlighted his work as a philanthropist and said he pioneered industries such as wireless communications, telecommunications, and homebuilding.
The press release also named the people who supported his clemency, including some familiar figures from his career: Rupert Murdoch, and, most surprisingly, the man who brought the charges against him in 1989, Rudy Giuliani.
Commenting on his pardon, Milken said, "Lori and I, who recently celebrated our 51st wedding anniversary, along with our children and grandchildren, are very grateful to the President. We look forward to many more years of pursuing our efforts in medical research, education and public health."
