Michael Robert Milken (born July 4, 1946) is a former American financier and philanthropist. He is best known for his role in developing markets for high yield bonds ("junk bonds") for his belief after plea guilty of alleged crimes for violating US securities laws, and charitable giving.
Milken was indicted for extortion and securities fraud in 1989 in an insider trading investigation. As a result of bargaining plea, he pleaded guilty to securities and reported violations but did not extort or insider trading. Milken was sentenced to ten years in prison, a $ 600 million fine, and permanently banned from the securities industry by the Securities and Exchange Commission. His sentence was subsequently reduced to two years for cooperating with testimony against his former colleagues and for good behavior.
Supporters, such as George Gilder in his book Telcosm (2000), point out that "Milken is a major source of organizational change that has driven economic growth over the last twenty years, most notably the spike in productivity in the capital, such as Milken... and the others take the huge amount trapped in the old business and return it to the market. "
Since his release from prison, Milken has funded medical research.
He is co-founder of the Milken Family Foundation, chairman of the Milken Institute, and founder of medical philanthropy funding research into melanoma, cancer and other life-threatening illnesses. A prostate cancer patient, Milken has devoted significant resources to researching the disease. In the November 2004 cover article, Fortune magazine called it The Man Who Changed Medicine for a change in the funding approach and the results he started.
Milken's compensation, while the head of the high-yield bond department at Drexel Burnham Lambert in the late 1980s, exceeded $ 1 billion in a four-year period, a new record for US earnings at the time.
With an estimated net worth of around $ 2 billion in 2010, it was ranked by magazine Forbes as the 488th richest man in the world.
Video Michael Milken
Education
Milken was born in a middle-class Jewish family in Encino, California.
He graduated from Birmingham High School where he was the head cheerleader and worked while at school at the restaurant. His classmates include actress Sally Field and Cindy Williams. In 1968, he graduated from the University of California, Berkeley with B.S. with the highest award in which he was elected to Phi Beta Kappa and is a member of the Sigma Alpha Mu fraternity. He received his MBA degree from Wharton School of University of Pennsylvania. While at Berkeley, Milken was influenced by a credit study written by W. Braddock Hickman, former president of the Federal Reserve Bank of Cleveland, which noted that the non-investment grade bond portfolio offers a "risk-adjusted" return greater than the investment value portfolio.
Maps Michael Milken
Careers
Through his Wharton professor, Milken earned a summer job at Drexel Harriman Ripley, the old investment bank, in 1969. After completing his MBA, he joined Drexel (then known as Drexel Firestone) as director of low-level bond research. He was also given capital and allowed to trade. For the next 17 years, he has only four months down.
Drexel joined Burnham and Company in 1973 to form Drexel Burnham. Despite the company name, Burnham is a nominal victim; Drexel's name only appears first at the insistence of a stronger investment bank, whose blessings are necessary for the merged companies to inherit Drexel's position as a "big" company.
Milken is one of the few prominent relics of the merger side of Drexel, and became the head of converters of the joining companies. He persuaded his new boss, Wharton alumnus Tubby Burnham, to let him start the high-yield bond trading department - an operation that immediately gained a 100% return on investment. In 1976, Milken's income at the present Drexel Burnham Lambert place is estimated at $ 5 million per year. In 1978, Milken moved high-yield bond operations to Century City in Los Angeles.
High yield bonds and leveraged purchases
In the mid-1980s, the network of high-yielding Milken bond buyers (especially Fred Carr and Tom Spiegel's Columbia Savings & Loan Executive Insurance Insurance Company) has reached the size that enables it to raise huge amounts of money very quickly.
This fundraising ability also facilitates the activities of leveraged buyout (LBO) companies such as Kohlberg Kravis Roberts and so-called "greenmailers". Most of them are armed with "confident letters" from Drexel, a tool made by the wings of financial firm Drexel which promises to raise the necessary debt on time to meet the buyer's obligations. Despite not having legal status, at this time Milken has earned a reputation for being able to create a market for every bond that he underwrote. For this reason, "very confident letters" are considered capable of showing ability to pay.
Among his most important critics is Martin Fridson formerly Merrill Lynch and author Ben Stein. Milken's high-yield "pioneer" status has proven to be doubtful because studies show that high-yielding "original" issues are common during and after the Great Depression. Milken himself pointed out that high yield bonds return hundreds of years, issued by Massachusetts Bay Colony in the 17th century and by the first US Treasury Secretary Alexander Hamilton. Others such as Stanford Phelps, an early partner partner and rival at Drexel, also questioned his credit as a pioneer of the modern high-yield market.
Despite its influence in the financial world during the 1980s (at least one source referred to him as America's most powerful investor since J. P. Morgan), Milken is a very private person who avoids publicity. Citing the forces behind the most aggressive companies on Wall Street, banker Drexel often uses "Michael says..." to justify their tactics.
Later career
Milken and his brother Lowell founded the Knowledge Universe in 1996, as well as Learning Learning Corporation (KLC), the parent company of KinderCare Learning Centers, the nation's largest provider of childcare services. He is currently the chairman of the company.
He founded K12 Inc., a public education management organization (EMO) that provides online education, including for chartering school students whose services are paid for by the dollar tax, which is the largest EMO in registrations.
Scandal
And Stone, a former Drexel executive, writes in his April Fools that Milken has been under the almost constant scrutiny of the Securities and Exchange Commission since 1979 and beyond because of unethical and sometimes illegal behavior in the department of results high..
Milken's role in such behavior has been much debated. Stone claims that Milken views securities laws, rules and regulations with a degree of humiliation, feeling they are inhibiting the flow of free trade. However, Stone says that while Milken pardoned the act of being questioned and illegally by his comrades, Milken himself personally followed the rules. He is often called the president and CEO of Drexel, Fred Joseph - known for his strict view of securities laws - with ethical questions.
On the other hand, some James B. Stewart sources used to Den of Thieves told him that Milken often tried to get a higher markup on the trade than was allowed at the time.
Harvey A. Silverglate, a prominent defense attorney representing Milken during the appeals process, disputes that view in his book "Three Felonies of the Day": "Milken's biggest problem is some of his most astute but completely legitimate maneuvers, by those who initially do not understand it, as heretical, precisely because they are novels - and often very profitable. "
Ivan Boesky's "Ivan_Boesky_and_an_intensifying_investigation" and intensive investigation
The SEC investigation never went beyond the stage of investigation until 1986, when arbitrageur Ivan Boesky pleaded guilty to securities fraud as part of a larger insider trading investigation. As part of his defense, Boesky engages Milken in several illegal transactions, including insider trading, stock manipulation, fraud and stock parking (buying shares for the benefit of others). This led to SEC Drexel's investigation, as well as a separate criminal investigation by Rudy Giuliani, then US Attorney for the Southern District of New York. Although both investigations were almost entirely focused on the Milken department, Milken refused to speak with Drexel (who launched his own internal inquiry) except through his lawyer.
For two years, Drexel insisted that nothing was illegal, even when the SEC formally sued Drexel in 1988. Later that year, Giuliani began to consider Drexel's charges under the Strong Organizers and Corruption Act. Drexel's management immediately began bargaining talks, concluding that no financial institution could survive the RICO indictment. However, the talks collapsed on December 19, when Giuliani made several demands that Drexel found too hard, including the one that Milken left the company if he was charged.
However, a day later, Drexel's lawyers discovered suspicious activity in one of Milken's established limited partnerships to allow members of his department to make their own investments. The entity, MacPherson Partners, had obtained some warrants for Storer Broadcasting stock in 1985. At that time, Kohlberg Kravis Roberts was in the midst of Stever's leveraged purchases, and Drexel was primarily responsible for the issuance of bonds. One of Drexel's other clients bought some of Storer's warrants and sold them back to the high-yield bond department. The department then sells it to MacPherson. These partnerships include Milken, other Drexel executives, and some Drexel customers. However, it also includes some money market funds managers who have worked with Milken in the past. It seems that money managers buy warrants for themselves and do not offer equal opportunities for the funds they manage. Several Milken children also received a warrant, according to Stewart, enhancing Milken's self-related appearance.
However, warrants for money managers are very problematic. At the very least, Milken's actions constitute a serious violation of Drexel's internal regulations, and money managers have violated their fiduciary obligations to their clients. At worst, warrants may be interpreted as a bribe to money managers to influence the decisions they make for their funds.
Indeed, some money managers were eventually convicted of bribery allegations. The discovery of MacPherson Partners - whose existence was not publicly known at the time - seriously erodes Milken's credibility with the council. On December 21, 1988, Drexel appealed against six counts of stock parking and stock manipulation. Drexel said "not in a position to refute allegations" made by the government. As part of the deal, Drexel agrees that Milken should leave the company if charged.
The indictment and punishment
In March 1989, a federal grand jury charged Milken with 98 allegations of extortion and fraud. The indictment accuses Milken of committing a litany of mistakes, including insider trading, stock parking (hiding the real owner of a stock), tax evasion, and a number of examples of repayment of ill-gotten gains. One allegation is that Boesky paid Drexel $ 5.3 million in 1986 for Milken's profit share of illegal trade. This payment is represented as a consultation fee to Drexel. Shortly after, Milken withdrew from Drexel and formed his own company, the International Capital Access Group.
On April 24, 1990, Milken pleaded guilty to six allegations of securities and tax breaches. Three of them involved a deal with Ivan Boesky to hide the true owner of a stock:
- Assist and conspire with the failure of others to submit accurate 13d statements with the SEC, since the schedule is not changed to reflect the understanding that any losses will occur.
- Sending a confirmation slip by mail failing to disclose that the commission is included in the price.
- Assist and conspire with others in submitting an inaccurate broker-dealer report with the SEC.
Two other calculations are related to tax evasion in transactions that Milken does for a corporate client, David Solomon, an investment manager.
- Selling a stock without expressing the understanding that the buyer will not lose money.
- Approve to sell the securities to the customer and repurchase the security at a real loss to the customer, but with the understanding that he will try to find a profitable transaction in the future to indemnify.
The last count is a conspiracy to commit these five offenses.
As part of his defense, Milken agreed to pay a $ 200 million fine. At the same time, he agreed to a settlement with the SEC in which he paid $ 400 million to investors who had been harmed by his actions. He also received a lifetime ban from any involvement in the securities industry. In a civil suit related to Drexel, he agreed to pay $ 500 million to Drexel investors. In total this means that he paid $ 1.1 billion for all lawsuits related to his actions while working at Drexel.
Critics of government allegations that the government accused Milken Lowell's brother of pressuring Milken to settle, a tactic condemned as unethical by some jurists. "I was annoyed by - and other intellectuals bothered by - the idea of ​​putting relatives at the negotiating table," said Vivian Berger, a professor at Columbia University Law School, in a 1990 interview with The New York Times. As part of the deal, the case against Lowell was canceled. Federal researchers also questioned some of Milken's relatives about their investments.
At Milken's sentence Judge Kimba Wood told him:
You are only willing to commit an impossible crime.... When a man is powerful in the financial world... repeatedly plotting to break, and breaking, securities and tax business to achieve more power and wealth for himself... is needed a significant prison sentence.
In a statement to the parole board in 1991, Judge Wood estimated that "the total loss from Milken crimes" was $ 318,000, less than the government's estimate of $ 4.7 million and he recommended that he qualify for a parole in three years. The Milken sentence is then reduced to two years out of ten; he serves 22 months.
Efforts to secure presidential pardon
In June 2018 it was reported that some of President Donald Trump's advisers, including Rudy Giuliani, federal prosecutor ever, whose criminal investigations led to Milken's belief, in which the president urged Milda to forgive. Milken's efforts to secure the president's pardon have spanned much of the administration.
SEC 2013 investigation
In February 2013, the SEC announced that it is investigating whether Milken violated its lifetime ban from the securities industry. Investigations are based on Milken suspected of providing investment advice through Guggenheim Partners.
Since 2011, the SEC has been investigating the Guggenheim relationship with Milken clients.
Philanthropy
In 1982, Milken and his brother Lowell founded the Milken Family Foundation to support research and medical education. Through the Milken Educator Awards (founded in 1985), the MFF has awarded a total of over $ 60 million to more than 2,500 teachers. Among other initiatives of the Milken Family Foundation are:
- Milken Institute, a non-profit and non-partisan economic think-tank whose scholars publish research papers and conduct conferences on global and regional economies, human resources, demographics and capital markets. Every spring, the Institute hosts the Global Conference in Los Angeles;
- Milken Scholars, a program that provides outstanding secondary school graduates with a four-year commitment of college financial assistance, counseling, volunteer opportunities and preparation for postgraduate studies;
- TAP: Systems for Student and Student Enhancement, comprehensive research-based strategies to attract, develop, motivate and retain high-quality teachers for American schools;
- Mike Math Club, a curriculum enrichment program aimed at showing students in an elementary school in a city that math is not only useful, but entertaining;
- Festival for Youth, a school-based community service program that engages students in year-round service projects to help build a vibrant community; and
- Milken Family Foundation's Epilepsy Research Awards Program, which funded research to understand and conquer epilepsy.
After being released from prison in 1993, Milken founded the Prostate Cancer Foundation for prostate cancer research, which in 2010 was "the largest source of philanthropic funds for prostate cancer research." Milken himself was diagnosed with advanced prostate cancer in the same month when he was released. His cancer is currently in remission. The Prostate Cancer Foundation works with Major League Baseball through the Home Run Challenge program to raise awareness of prostate cancer and raise money for medical research. Every season in the weeks leading up to Father's Day, Milken visited many ballpark and appeared on TV and radio broadcasts during the game.
In 2003, Milken launched a think tank based in Washington, DCC called FasterCures, which seeks greater efficiency in researching all serious diseases. FasterCures' main initiatives are TRAIN, Partnerships for Cures and Philanthropy Advisory Services.
Fortune magazine named Milken "The Man Who Changed Medicine" in a 2004 cover story about his philanthropy.
In September 2012, Milken and director of the National Institutes of Health, Dr. Francis Collins, jointly organized 1,000 senior medical scientists, patients, activists, philanthropists, regulators, and members of Congress at a three-day conference to demonstrate return on investment in medical research.
On March 11, 2014, President Steven Knapp of George Washington University in Washington, DC announced that the university would rename its public health school after Milken as a result of a total of $ 80 million in prizes, $ 50 million from Milken Institute and the Milken Family Foundation and a $ 30 million from the chair of Viacom, Sumner Redstone. The prize is intended for research and scholarship on public health issues.
In popular culture
Milken became the first recipient of the Ig Nobel Economics Prize in 1991.
Akhtar Ayad Akhtar, Junk , which was organized during the bond trading scandal of the 1980s, is based in part on Milken's "fall from grace". Milken is the inspiration for the main character in the drama.
Personal life
Milken is married to Lori Anne Hackel, whom she dated in high school. They have three children.
See also
- Savings and loan crisis
References
- Notes
- Further reading
- Connie Bruck - Predator Balls: story inside Drexel Burnham and revival of junk bond robber , New York: American lawyer/Simon & Schuster, 1988, Penguin paperback (updated), 1989.
- Fenton Bailey - "Fall From Grace: The Uncountable Story of Michael Milken", Carol Publishing Corporation (Oct. 1992), ISBNÃ, 1-55972-135-9.
- James B. Stewart - Den of Thieves , New York: Simon & amp; Schuster, 1991, (ISBN 0-671-63802-5).
- Ben Stein - License to Steal: Story Untitled Michael Milken and Conspiracy for Bilk the Nation , Simon & amp; Schuster, 1992
- Daniel R. Fischel - Returns: a conspiracy to destroy Michael Milken and his financial revolution , New York: HarperBusiness, 1995, (ISBNÃ, 0-88730-757-4).
- Robert Sobel - Dangerous Dreamer: Financial Innovator from Charles Merrill to Michael Milken ' (1993), (ISBN 0-471-57734-0).
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Michael Lewis. (1989). Wild Poker: Rising through the Wreckage on Wall Street . New York: W.W. Norton. ISBN 0-393-02750-3. - Penampilan di C-SPAN
- "Michael Milken mengumpulkan berita dan komentar". The New York Times . Â
External links
Media terkait dengan Michael Milken di Wikimedia Commons
Source of the article : Wikipedia
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