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To: Broken_Clock who wrote (22167)	5/16/1998 3:49:00 PM
From: Chuzzlewit	Read Replies (1) \| Respond to of 95453

PK, how about the fact that such things as 10-Ks and 10-Qs are mandated? Your point about Milken is well taken, but I think its evidence that we need increased vigilance, not less -- that means increased funding, not less. And Milken's punishment is more an issue of the law "If the law believes this it's a ass ..." and legislation then it is of government services. BTW, the reason that the CIA gave for being caught flat-footed on the India nuclear bomb tests was budget cuts. Just another perspective, TTFN, CTC

To: Broken_Clock who wrote (22167)	5/17/1998 1:03:00 PM
From: dougjn	Respond to of 95453

Milkin became a poster boy for 80s Wall Street greed, corruption and insider trading. Largely unjustly in my view. Ivan Boesky was a true insider trading crook. He paid off smaller invest. bankers, lawyers, and other insiders literally with attache cases filled with cash, in some cases, in order to buy and sell on inside information. There were a fairly large number of others. Milken was not one of them What Milkin did was very much borderline. He was, in essence, charged with manipulating the junk bond market. The truth was that he was so central a pressence in that market, had so much market share, and so much influence and respect within it, that it was almost inevitable that he had maniplating influence. The basics of what made him so powerful was his invention of the junk bond as a respectable method of finance for up and coming, as opposed to falling down near bankruptcy, companies. Before Milkin, you had to be one of the 100 largest companies in America, or so, to be able to raise debt financing through a bond issue no matter how fast you were growing or how well you were doing. A failing member of the 100 largest before Milken could still issue debentures, albeit at a "junk" rating and with high interest rates, to cover the risk. But an up and coming Home Depot, or Wahlmart, etc. could not issue debentures. They only had the banks, a much higher total costs. Milken changed that. Dramatically. The kinds of things Milkin was guilty of was having soft handshake deals with his friends and business partners promising that he would buy out their junk positions at a "reasonable" price if they had reversals or needed sudden liquidity. He wouldn't guarantee a price (which depended on then market interest rates, etc.) but he also wouldn't take advantage of their illiquidiy. They in turn would have soft understandings with him that they would take from him and place in their portfolios the junk bonds he was marketing for other deals whenever he asked them to-- whenever he needed some more takers. They regarded it as fairly risk free, since Mike could always be depended on to make a market -- take them back, on pretty reasonable terms. Until it all collapsed in 1989. Very little if anything Milkin did was clearly or bright line illegal. As I said, borderline, and probably over the border. However, the public opinion against him at the time, after the second collapse of the market and big collapse of the junk bond market in 89 was very bad. He was an evil multi-billionaire. He was the leader of the ilk that had treatened all that was good about the old order of American business. (And he ushered in the restructuring that is now hailed, together with the ongoing computer technical revolutions, with making American business once again world leading and awesome.) Of course the success lead to excess. When Milkin started using junk bond financing to fund massive takeovers in the mid 80s, at an incredibly accelerating rate, all of corporate America felt threatened. The other Wall Street houses, while scrambling mightily to jump into the junk bond game, felt hugely resentful and very much left behind. Milken's unassailable leadership had to be based on shady practices. How else could Morgan Stanley, Goldman Sachs and First Boston be badly trailing Milken's Drexel Burham in by far the richest game then extant on Wall Street??? There was a huge impetus to get Milkin. And Guiliani got him. Milkin plead, sensing that he wasn't gonna win a jury trial. And no I never did work at Drexel Burnham. Doug