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0:00
Michael Milken was the undisputed junk bond king. He revolutionized Wall Street by creating a high-yield bond market that fueled one of the greatest market booms in America's history.
0:11
Mike Milken was a total game changer back in the 80s. He had the Midas touch, making risky companies thrive and shaking up the whole financial world. But Milken's empire was built on a culture of secrecy and manipulation.
0:25
By the late 1980s, the net had closed around Milken.
0:29
Accusations of insider trading, stock manipulation and securities fraud began to swirl as government investigators zeroed in on his operations at Drexel Burnham Lambert. Michael R. Milken was indicted last week by a federal grand jury on charges of violating the federal racketeering law. Prosecutors are seeking the unprecedented financial penalty of $1.8 billion in the case against Mr. Milken.
0:58
Michael Milken transformed American industry. Whether or not Milken bent or broke some of the rules.
1:05
Wall Street is in a continuing state of shock as a result of the greatest scandal in its history.
1:11
The 1980s was an era of unchecked growth, of boundless ambition. He was, in so many ways, a pure product of this tumultuous time. [Music]
1:40
Michael Milken was born in Encino, California, into a hardworking Jewish family.
1:46
His father, Bernard Milken, was an accountant by trade, while his mother was a stay-at-home mother. Even as a young boy, Milken shows a strong fixation on numbers.
1:57
So his father was an accountant. He would bring all of his work ledgers home, spread them out on the dining table. Michael, maybe eight or seven, would sit beside him, and he wasn't bored by all the numbers. He was completely fascinated by the logic behind it all. Numbers. They have a certain purity. You know, unlike people, numbers don't lie. They don't have emotions. They just tell you the truth. That's why I loved them. That's why I trusted them.
2:22
By the time he graduates high school, Michael has earned a formidable reputation.
2:27
He's a polymath, excelling across diverse subjects, and a natural leader. As a result, he gains acceptance to one of the most prestigious institutions on the west coast, the University of California, Berkeley.
2:42
It is there, amidst the intellectual ferment of Berkeley, that Michael first encounters the groundbreaking financial theories that will forever alter the course of his life.
2:57
It happens in one pivotal class, a moment that changes everything.
3:03
Michael Milken is introduced to the work of W. Braddock Hickman. Hickman's studies challenge the old ways of thinking. He rewrites the rules of credit markets. Hickman's research revealed that a portfolio of low-rated, high-yield bonds will generally outperform a portfolio of high-rated, safer bonds on a risk-adjusted basis.
3:26
For most students, Hickman's findings are just another footnote, an interesting academic detail. But for Michael, it is a revelation. What others dismiss as worthless as junk actually holds immense, untapped value.
3:42
He realizes the potential to unlock vast sums of capital for companies that traditional banks ignore.
3:48
By the time he graduates with honors from Berkeley in 1968, Michael's intellectual hunger has only intensified. He craves more.
4:00
He sets his sights on the Wharton School of the University of Pennsylvania,
4:04
one of the most prestigious business schools in the world, a place where future titans of finance are forged.
4:12
After graduating, Michael Milken could have joined any of Wall Street's blue-chip firms.
4:19
Instead, he chooses Drexel Firestone, a second-tier investment bank with a little of the glamor or reputation of its competitors.
4:32
Drexel. The firm begins in 1838, founded by Francis Martin Drexel in Philadelphia.
4:39
It quickly becomes a cornerstone of 19th-century finance. They help build America. They bankroll the railroads. They fund the infrastructure of the Industrial Revolution. During the early days of American expansion, access to capital was the fuel behind the nation's industrial rise, and merchant banks like Drexel filled that void.
5:03
Drexel stood out because they didn't just lend them money. They helped businesses grow, and they developed close relationships. with the people they financed. But by the mid-20th century, Drexel falters. It stagnates. While rivals like Goldman Sachs and Morgan Stanley embrace new markets, Drexel falls behind. They fail to innovate, attempts to modernize. In other words, it is a firm too comfortable with its past, unwilling to take the risks necessary to invest in the booming new industries.
5:36
But for Michael Milken, it is opportunity. He sees a blank slate. Drexel is the perfect stage.
5:44
He sees the foundation of a financial empire, and he begins to build it.
5:57
Michael Milken arrives at Drexel. He has a vision for a new kind of market, a junk bond market. But in these early days, he faces ridicule. Most see his position as a dead end.
6:11
He's assigned to the bond trading desk, a quiet corner. Yet Milken immediately begins to scour the market, searching for opportunities everyone else ignores.
6:22
He becomes fixated on fallen angels. These are once-prized corporate bonds, now downgraded, stripped of their prestige. They trade at rock-bottom prices. To most, they are financial waste. But where others see immense risk, Milken sees hidden value. He digs deep. With a meticulous analysis, he identifies companies that, despite their struggles, possess the potential for recovery.
6:49
It was these discounted bonds, both straight and convertible, some of them selling as low as 10 or 20 or 30 cents on the dollar, that fascinated Milken. He had been under their sway since the 60s, when he began investing in them with money, and given him to manage by some of his accountant-father's clients.
7:10
Milken's fascination with junk bonds is a joke, a source of amusement.
7:16
The very name of junk bond carries a stigma that most traders scoff. So to them, Milken wasn't innovating. He was dabbling in financial garbage.
7:30
Slowly, his radical vision begins to take shape. By the early 1970s, Milken's trading desk at Drexel is turning a profit, even as the rest of the firm struggles, his corner of the market thrives.
7:44
Michael Milken's apparent success does not go unnoticed.
7:49
One man at Drexel sees it. He sees an opportunity to harness this newfound profit machine. He believes it can finally break the firm out of mediocrity. His name is Fred Joseph.
8:06
Fred Joseph didn't come from money, but he climbed steadily. First through Harvard Business School, then through a series of tough jobs that sharpened his instincts and gave him an edge others didn't have. By the mid-1970s, Joseph had risen to the top of Drexel Burnham Lambert, taking the reins at a time when the firm was struggling to find its place. Fred Joseph was called "Dr. Feelgood." He was the polished, affable, and supremely accessible face of
8:36
Drexel Burnham Lambert, especially as Michael Milken's operation became highly visible.
8:42
Milken is the financial genius, the architect of the new market. But Joseph provides the critical support. He opens doors, provides crucial connections.
8:53
He believes that Milken's audacious ideas, his revolutionary vision for junk bonds, can truly drive Drexel's future.
9:01
Together, they form an unlikely alliance, an alliance that will soon shake Wall Street to its core.
9:11
Shareholders of the nation's largest real estate investment trust, the Chase Manhattan Mortgage and Realty Trust, authorized their trustees yesterday to get out of the financially troubled business. It is 1975. The real estate market is crumbling. But in this chaos, Michael Milken and Fred Joseph spot something. An unlikely opportunity.
9:33
Real estate investment trusts are devastated. Battered by the economic turbulence of the early 1970s, their bonds have plummeted. They now hold junk status.
9:46
A REIT is a company that owns, operates, or finances income-producing real estate. It allows investors to buy shares in real estate portfolios, earning dividends from rental income or property sales without directly managing properties. Think of A REIT as a mutual fund for real estate.
10:06
Milken sees past the wreckage. He realizes these distressed securities, these broken pieces, can be revitalized. He understands their true potential. And Joseph, Drexel's new corporate finance head, shares his ambition. He backs Milken. Together, they forge a bold strategy.
10:26
Milken will trade the deeply discounted REIT bonds, buying up what others are desperate to unload.
10:33
Meanwhile, Joseph's team works tirelessly. They secure new transactions. They stabilize the struggling companies behind these bonds.
10:42
It was a perfect synergy. Fred Joseph was great at closing deals, and Milken was great at creating liquidity in what had been in the liquid market. This is a massive gamble. For Drexel, a firm teetering on the edge of irrelevance, success means a lifeline, a chance to claw its way back into the top ranks of Wall Street. By 1976, Drexel stands as the undeniable force in this revitalized market. They facilitate deals for an astonishing 95 of the 130 active rates across America,
11:24
effectively controlling the lion's share of a sector once deemed worthless. It is a profound market transformation, all orchestrated from Drexel's modest trading desk.
11:42
The American economy in the late 1970s, a period of turbulence, of uncertainty. Inflation spirals out of control, with annual rates reaching over 13% by 1979, eroding purchasing power, and the economy of the world. And fueling public frustration. People who want to work but can't find jobs are part of today's other bad economic news. The unemployment rate soared to 8.2% nationwide last month, and it rose to an even higher figure here in California.
12:11
At the same time, economic growth stagnates. GDP crawls along. Millions are unemployed. A sense of unease hangs in the air. But amid this economic chaos, Michael Milken thrives. He sees opportunity, where others see only obstacles.
12:28
Traditional banks, they tighten their lending, wary of high inflation and stagnant growth. But Milken is different. He identifies a vast, untouched market. High yield, low-grade bonds. Bonds most dismissed as too risky. His work is groundbreaking. It doesn't just create liquidity for distressed companies, it provides vital capital to businesses completely overlooked by traditional financiers. He built an entirely new financial ecosystem. These include insurance companies, mutual funds and
13:00
financiers who are willing to bet on his ideas.
13:05
And this network will become the rock upon which he builds his financial empire.
13:13
With his initial groundbreaking success, Michael Milken pushes for more. He convinces Fred Joseph, the firm's leader, to let him move.
13:25
Milken wants to go back to California. He will set up his own shop there, still under Drexel's oversight, but with virtually complete autonomy.
13:33
This isn't just a request. It's a demand backed by undeniable profits. Drexel agrees because they have no choice. Milken is their golden goose. He is too vital to deny. But the problem is, leaving Wall Street would potentially isolate him from the financial epicenter, losing access to the powerful face-to-face relationships that had long defined success in the industry.
13:58
Milken in early 1978 announced to his immediate boss that he wanted to move his entire high-yield group to Los Angeles. He and his wife were both LA natives. The winters in the east were too hard on her and their young children who were sick a great deal and he and his wife were intent on going home.
14:20
But Michael Milken is determined to prove that location is no barrier to success. The success with REITs, while spectacular, is just the beginning. The market he's built is still small, nothing compared to the titans of Wall Street. He needs a bigger arena. He needs to expand to truly revolutionize finance from his new base.
14:44
Soon he will seize the opportunity of a lifetime, a deal that will transform an entire industry.
14:56
Steve Wynn is a man from the east coast. He was born in New Haven, Connecticut. His father ran bingo parlors.
15:04
After his father's death, a young Wynn took over the struggling family business, learning about risk and turning it around.
15:14
In 1967, he moved to Las Vegas. By 1971, he gained control of the Golden Nugget, transforming the Dusty Casino into a Ford Diamond Resort.
15:25
At 31, he was the youngest casino owner. But he wants more. He sees a new frontier, Atlantic City, New Jersey. Gambling is now legal there, a raw, undeveloped market.
15:43
Wynn envisions a grand Golden Nugget Casino, a beacon on the boardwalk, a monument to his ambition. And this project will cost $100 million.
15:54
But the problem is, he's still an outsider, a relative unknown in the realm of high finance. And no traditional bank will put up the enormous money needed for such a massive gamble.
16:11
To most traditional financiers, Steve Wynn's proposal for Atlantic City is simply laughable. His company, at this point, has a net worth of just $10 million.
16:22
His annual income is a mere $3 million. He's asking for a sum that dwarfs his entire operation. The banks see a small-time operator with a wildly unrealistic dream. But Wynn's audacity, his sheer nerve, catches the attention of Michael Milken. Milken is far from the conservative halls of Wall Street, and he sees not a liability, but an opportunity. Where established banks refuse to back Wynn, citing risk and scale, Milken sees a chance to use his high-yield bonds to fund a true visionary.
16:58
The gaming industry was essentially without investment banking services because no other firm wanted the taint, and gaming was not considered a growth industry at the time. If Drexel could overcome its queasiness, it could probably have the whole industry. And besides, Milken wanted it.
17:17
He raises an unprecedented $160 million for Wynn's ambitious Atlantic City project. It's a staggering sum, money that no one else would provide.
17:29
The Golden Nugget is a beautiful place. And you know why? Because these people who work here make it more beautiful. When the Golden Nugget Atlantic City finally opened its doors, it was an instant success. It basically set the bar for how much money a casino could make. And for Wynn, his personal net worth skyrocketed from $2 million to $75 million almost overnight. The success of deals like Steve Wynn's Golden Nugget project solidifies Michael Milken's reputation. He's no
18:02
longer just a maverick. He is a financial revolutionary. Drexel, once struggling, is now a powerhouse. But with this unprecedented power comes temptation. And with the autonomy Milken now commands, comes the ability to operate in the shadows. Milken's world, built on risk and sheer volume, begins to intersect with another ambitious figure. A man who will later bring it all crashing down.
18:29
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19:44
After the runaway success with Steve Wynn and the Golden Nugget, Michael Milken's financial empire expands at an unprecedented speed.
19:53
His junk bonds are no longer a joke. They are a legitimate, powerful force.
20:01
By the early 1980s, the financial landscape pulses with Milken's influence, and one man, consumed by ambition, is eager to expand his own empire.
20:12
He knows Michael Milken is the miracle man to make it happen.
20:21
Ivan Boesky is a Wall Street speculator who makes a living from corporate takeovers and mergers. He doesn't build companies. He bets on their fate.
20:32
Born in Detroit to a father who owns a restaurant, Boesky works his way into finance, eventually starting his own firm in 1975.
20:42
By the early 80s, he has amassed a fortune, rumored to be over $200 million, by shrewdly predicting which companies will be acquired.
20:52
Someone like Boesky, with a lot of hunger, a lot of greed, was almost certain to cross paths with Milken. He needed a bigger capital, more leverage, and Milken was the guy for him.
21:05
He's interested in the ownership and movement of assets, constantly seeking targets for merger arbitrage. He sees the hospitality sector as ripe for his particular brand of financial play.
21:19
Milken's Drexel Burnham Lambert swiftly facilitates a $100 million bond issuance for Vagabond Hotels, a subsidiary of Boesky's Beverly Hills Hotel Corporation.
21:31
It's a significant infusion, allowing Boesky to fuel his aggressive arbitrage strategies. By the mid-1980s, the relationship between Drexel and Boesky deepens profoundly. Drexel provides vast amounts of capital for Boesky's high-stakes trades, leveraging the power of Milken's Junk Bond Machine.
21:51
In return, Boesky's uncanny ability to predict stock movements and upcoming corporate takeovers adds a mysterious allure, almost an oracle-like quality, to his success. Milken, always looking for an edge for new ways to expand his burgeoning Junk Bond ecosystem, finds Boesky's insights incredibly useful.
22:12
What begins as a seemingly brilliant, mutually beneficial collaboration would eventually lead to catastrophe.
22:20
But in the meantime, Michael Milken's momentum of success seems unstoppable.
22:32
The early 1980s is a dramatic turning point for the American economy.
22:36
After a decade of economic stagnation, crippling inflation, and crushing unemployment, a new era begins. The policies of the Reagan administration usher in sweeping reforms, a sense of recovery takes hold.
22:51
Amid this booming decade, Michael Milken and Drexel Burnham Lambert emerge not just as players, but as pioneers. They are at the forefront of a rapidly evolving financial landscape. By 1983, Milken has transformed Drexel's high-yield bond department into an unparalleled profit machine. It's an engine printing money.
23:13
The capital raised through his junk bonds is revolutionary. It enables companies long overlooked by traditional banks. They can now expand. They can acquire. They can innovate. Milken is fueling a new class of American business.
23:31
But to grow even bigger, Michael Milken knows he needs a newer market, a grander stage. He finds it in a controversial tactic, hostile takeovers. So traditional corporate takeovers relied on a lot of cash reserves or bank loans, which made hostile takeovers really difficult to execute. But Milken sees a path. He realizes his instruments, his high-yield bonds, can provide an elegant solution.
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They can unleash massive amounts of capital without requiring the acquirer to drain his own reserves. It's a financial weapon.
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Now, he just needs to find the very first deal, the one that will kick-start this new aggressive era.
24:19
National Can Corporation was an old company in America. Founded in 1902, the company became a major player in the production of metal packaging, serving sectors ranging from food and beverage to industrial goods.
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Throughout the mid-20th century, National Can expanded aggressively, taking advantage of the growing demand for packaged goods during and after World War II. By 1982, however, National Can faces a crossroads. The company is massive, but it is also burdened. Inefficiencies weigh it down. It is vulnerable.
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And one man realizes this struggling giant could be the opportunity he's been waiting for. His name is Nelson Peltz.
25:08
Nelson Peltz is an up-and-comer in the world of mergers and acquisitions. Nelson Peltz grew up in a working-class Jewish family in Brooklyn, New York.
25:18
By the 1970s, Peltz has expanded his ambitions, moving aggressively into the realm of corporate acquisitions. Alongside his partner, Peter May, he quickly builds a reputation. Peltz is not a builder of businesses in the traditional sense. He is a reviver. He fixes broken companies. In 1972, they acquire Flagstaff Corporation, a struggling food company, making it much more profitable.
25:45
The takeover of National Can begins with Triangle Industries, Peltz's holding company. They launch an unsolicited $41-per-share tender offer. It catches National Can's management completely off-guard.
25:59
After intense negotiations, led by National Can CEO Frank Considine, Peltz raises the bid. It climbs to $42-per-share. Shareholder approval is secured. The deal is struck.
26:12
And now, Peltz faces the crucial task. He needs to find a way to pay for this massive bid. Traditional banks, wary of hostile takeovers, and the sheer volume of capital required, hesitate.
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Peltz, who had a track record in business that can be described as lackluster, saw National Can as the opportunity of a lifetime. But he has a long-time conviction that he would someday make it very, very big. It made him persist and continue to think in grandiose terms. There is but one company that can provide the necessary firepower. Michael Milken and Drexel Burnham Lambert step in. Drexel swiftly provides $365 million in junk bond financing for the $465 million acquisition,
27:02
leveraging National Can's own assets as collateral.
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Victor Posner, the Miami businessman, dropped a long-smoldering takeover attack against the National Can Corporation yesterday and said he would sell his stock in the company to triangle industries for nearly $150 million in cash.
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The deal leaves the newly acquired company with a staggering $565 million in debt. It is a monumental risk. But Michael Milken is confident. He believes the numbers. He trusts Peltz's ability to turn the company around.
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By early 1986, Peltz's operational improvements deliver record earnings of $162 million, silencing every single critic. Peltz and May's wealth explodes, rocketing from $9 million in 1983 to over $40 million post-acquisition.
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The success of the National Can deal, a daring hostile takeover fueled by junk bonds, paves the way for more.
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Each new deal is greater, more daring than the last.
28:25
Figures like Carl Icahn once fringe players now take on giant American companies, making hundreds of millions for themselves and their financiers. It is a new era for corporate America. But none of these deals come close to the audacity and scale of the battle for Revlon, spearheaded by a man who would stop at nothing to claim victory. His name is Ronald Perlman.
28:58
Perlman began his career working for his family's metal salvage company. But his true ambition lied elsewhere. His first major success came in 1978, when he acquired Cohen Hatfield Industries, a jewelry distributor, and sold off his parts for a staggering profit. Perelman is known for his relentless drive. He is meticulous, obsessed with details, often working late into the night. He is deeply resentful of losing.
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From there, Perlman built his empire, McAndrew's and Forbes Group, acquiring a string of well-known companies. He specialized in established, struggling consumer businesses and streamlining them for profit. He had a taste in iconic brands, and his suits were always perfectly tailored.
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By 1985, he finds a company that becomes his ultimate prize.
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Founded in 1932, Revlon began as a modest, nail-enamel business during the depths of the Great Depression. But it quickly grew, transforming into a global phenomenon. By the 1960s, Revlon became a shimmering symbol of glamour and sophistication, securing its place as one of the world's largest cosmetics companies. Revlon Research creates flex and go, the new, really new shampoo and conditioner in one.
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But by the early 1980s, Revlon falters. Its core cosmetics business, once dominant, begins to lose ground to agile competitors like Estée Lauder. With declining market share and a noticeable lack of strategic focus, Revlon's one soaring stock becomes undervalued. It is ripe for the taking.
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In the summer of 1985, Ronald Perlman, the head of McAndrew's and Forbes, sets his sights on this iconic brand.
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And he plans to use Pantry Pride, a recently acquired supermarket chain, as his unlikely vehicle for the audacious bid.
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Perlman initially approaches Michel Bergerac, Revlon's imperious CEO. He offers to negotiate a friendly deal, but Bergerac is fiercely protective of Revlon's legacy, seeing himself as his sole guardian.
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This rejection sets the stage for open conflict, a declaration of war. By August, Perlman launches a hostile bid, a direct assault.
31:42
He offers $47.50 per share, valuing Revlon at a staggering $1.9 billion. Revlon's management fights back. They implement desperate countermeasures, including a notorious poison pill strategy. A poison pill strategy is a company's anti-takeover measure that discourages outsiders from acquiring it by making the deal less appealing, such as diluting the acquirer's stake through issuing new shares at a discount. But Perlman is undeterred. He's relentless. He lowers
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his offer to $42 per share to account for the new liabilities created by the poison pill. His unwavering pressure forces Revlon's board to seek a white knight, a friendly bidder to rescue them from Perlman's clutches. So a white knight is a friendly buyer that is aligned with your vision so that you can fend off any hostile takeover buyers. Forsman Little, a leveraged buyout firm, steps in with an astounding $56.25 offer.
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Perlman, with the financial might of Michael Milken and Drexel Burnham Lambert behind him, responds with a new and final offer. $58 per share, a valuation so big that it goes beyond just business fundamentals but Perlman's determination to win. On November 20, 1985, the battle concludes. Pantry Pride acquires Revlon for $58 per share. It marks a landmark deal. It cements Ronald Perlman's status as a corporate titan, a formidable force in American business.
33:19
And it marks the end of Revlon's era as a family-run icon, forever changing the face of corporate America.
33:31
The early 1980s is a time of profound shift for the American economy. The spirit of Reaganomics sweeps across the nation. Deregulation takes hold. Tax cuts spur investment.
33:45
Wall Street explodes with euphoric energy. Money flows. Deals proliferate. The culture of finance becomes one of aggressive risk-taking, of ambition unchained. With successes of financing hostile takeover deals with the likes of Carl Icahn and Perelman. By 1985, Michael Milken had ascended to the pinnacle of Wall Street power.
34:08
At Drexel Burnham Lambert, far from the bustling New York trading floors, Milken orchestrates a complex network. It's a web of clients and investors, operating almost like an extension of his own singular vision.
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Milken's strength really is his unparalleled network. His clients, like these insurance companies, mutual funds, issuers, really trust Milken. And to them, Milken really is their golden goose. Clients see Milken not merely as a financier, but as a visionary. He becomes a cult-like figure. His judgment, his market calls, can seemingly transform fortunes overnight. He delivers, and they pay. But on Wall Street, trust and loyalty are often illusions. They are fragile facades, built on the
35:00
shifting sands of profit. These empires of paper can crumble in an instant.
35:07
And for Michael Milken, now seemingly invincible, his reckoning is just around the corner. The world he built is about to face its ultimate test.
35:23
By the mid-1980s, Ivan Boesky is a titan of Wall Street's mergers and acquisitions game.
35:30
But beneath his glittering success lies a darker truth. A secret. A hidden web of insider trading, built on illegal information and illicit tips. And by 1986, the SEC is closing in on him. They uncover his methods. They find undeniable evidence of his use of insider information to profit from corporate takeovers and mergers. And soon, Boesky is caught. Boesky's secret was his network of informants. They give him tips on upcoming deals so that he could place
36:06
strategic bets and make a lot of money.
36:10
Wall Street is in a continuing state of shock as a result of the greatest scandal in its history. Ivan Boesky, the central figure in Wall Street's insider trading scandal, has pleaded guilty to a charge of conspiring to violate securities laws. In November 1986, Boesky makes a deal. He agrees to cooperate with federal authorities. It is a desperate move. As part of his plea agreement, he admits to a shocking truth. He paid informants for insider tips. He
36:40
used this stolen information to trade ahead of merger announcements, exploiting the market for his own vast gain.
36:48
Among these illicit deals, Boesky reveals a scheme involving Fischbach Corporation, a construction company. He temporarily held shares on behalf of Drexel Burnham Lambert, a calculated move designed to obscure ownership and manipulate stock prices.
37:05
His cooperation with the government is comprehensive.
37:09
It includes detailed accounts of his dealings with Michael Milken and Drexel, implicating them in a broader web of market manipulation and insider trading.
37:19
If he turns state's evidence, it could mean the unraveling of Drexel, and Michael Milken's career and empire will crumble into ruin.
37:35
By the late 1980s, the walls are closing in on Drexel Burnham Lambert, and on its undisputed star financier, Michael Milken.
37:44
The SEC is emboldened by Ivan Boesky's explosive cooperation. They begin meticulously piecing together the intricate web of market manipulation, insider trading, and questionable practices. And soon, the prosecutors launch their full-on assault. This is no longer just a regulatory inquiry. This is a criminal pursuit.
38:06
Headlines shout, rumors spread, but Michael Milken remains outwardly confident. He believes they may still escape collapse. But no way he will be prepared for what is about to happen next.
38:23
On October 19, 1987, the Dow Jones plummeted 508 points, a staggering 22.6% decline, the largest single-day percentage drop in history. Trillions of dollars in market value evaporate. Years of heart-won gains vanish in mere hours. Around the world, markets follow suit. Similar, terrifying collapses ripple through London, Tokyo, and Hong Kong. As the Dow Jones Industrials took off on a fear-fed freefall to close down a record 508.32 points, panic
39:04
traders worked through lunch hours in a desperate but losing attempt to keep up with tickers that rolled up an all-time high volume. The crash shakes the very foundations of global finance. Corporations across the globe confront severe liquidity crises as asset values collapse into dust.
39:24
From Michael Milken and Drexel Burnham Lambert, Black Monday is not just a market correction. It is a terrifying turning point. The junk bond market, already under intense scrutiny from regulators and skeptics, now comes under unimaginable pressure. Investors, gripped by fear, flee high-risk securities en masse. Milken's meticulously cultivated network, the very backbone of his high-yield empire, begins to unravel. His once loyal clients now scramble to offload their risky holdings.
39:55
But Michael Milken is not one to surrender. To avoid a total collapse, to save his empire and Drexel from utter ruin, he launches a last-ditch effort. A desperate gamble.
40:12
Amid the cascading investigations, the relentless pressure that follows Ivan Boesky's explosive cooperation with federal authorities, Michael Milken fights back. He works tirelessly, attempting to reshape his public image. For someone who worked hard to shun publicity, Milken starts granting interviews. He attempts to portray himself not as a mastermind of manipulation, but as a visionary, a legitimate pioneer.
40:41
All that secrecy started to look like illicit dealings. So the hope was he could become Drexel's hidden ace by rebranding himself as a financial innovator instead of a criminal mastermind. But Milken's effort is too little, too late. The tide of public and government opinion has already turned, and the weight of the accusations against him is simply too great to be overcome by mere words. But Milken has one more trick. A desperate final play.
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He begins an effort to buy his way out of trouble. By 1988, mounting evidence piles against him, he makes an audacious offer. He proposes to pay a staggering $500 million fine. A half billion dollars. To me, I had to find a way to live again. And I had to cut it short and make a decision for my family, etc, to live again. The proposal aimed to prevent a criminal indictment of Drexel the company. Otherwise, it would totally collapse.
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Now, what happens next is all but certain.
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Michael R. Milken was sentenced to 10 years in prison, not for his role in a decade of greed, but for crimes that were aimed at enriching himself and his clients, Federal Judge Kimba M. Woods said yesterday.
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The fight is over. Michael Milken, the man who reshaped Wall Street, the architect of a new financial empire, ultimately surrenders to authorities.
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In a negotiated plea deal in 1990, the details are laid bare. Milken pleads guilty to six felony charges. These include securities fraud and conspiracy. He agrees to pay an astronomical sum, $600 million in fines and restitution. It is one of the largest financial penalties ever levied against an individual.
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The price of his empire now laid to waste. Michael Milken's arrest was a spectacle, both awe-inspiring and unsettling. But you gotta ask yourself, was he more guilty than the Wall Street machine he disrupted?
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Michael Milken's journey from the dizzying heights of Wall Street to the confines of a federal prison cell begins in 1991. He reports to the minimum security facility at Nellis Air Force Base in Nevada. The king of junk bonds once commanding billions now navigates a starkly different world.
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His initial 10-year sentence looms large, but soon it sees a dramatic reduction, dropping to just two years, a short time for a sentence so grand, yet it is enough to fundamentally change the man. When I think of the diversion of less than two years, and it was a short period of time in the scheme of things. Upon his release in 1993, Milken faces a lifetime ban from the securities industry. The world he built, the very market he revolutionized, is now closed to him. His old life, gone forever.
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But Michael Milken is not a man to stay down. He quickly reinvents himself. Through the Milken Family Foundation, he spearheads funding for cancer research, becoming a prominent advocate for advancements in prostate cancer treatments, a cause made personal by his own diagnosis in the early 1990s. Michael Milken's post-prison life was also impressive. He started investing for himself, and he grew his wealth to $3.7 billion by 2023.
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Over the years, Milken works to reshape his public image, emphasizing his role in democratizing access to capital and championing entrepreneurial innovation. In 2020, after decades of public and private advocacy on his behalf, President Donald Trump grants Milken a full pardon. Yeah, Tyler, that's right. The president just announced that he has pardoned the controversial and legendary Wall Street figure, Michael Milken. In remarks to reporters at Andrews Air Force Base just
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a short time ago, the president said that Michael Milken is on a list of figures who he has issued pardons or commutations to. Michael Milken's story, it is one of extraordinary highs and devastating lows, a rise to unimaginable power, followed by a dramatic public fall. His life encapsulates the very spirit and the stark excesses of the 1980s. He was, in so many ways, a pure product of this tumultuous time. The 1980s was an era of unchecked growth, of boundless ambition,
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of a relentless drive for more. And Milken truly personified both its immense opportunities and its inherent excess and greed. He would tell you about all these noble goals of helping little guys, right? But for him, it was about the game itself. It was the intellectual stimulations. And that's what really drove him. Making these videos has led me to meet people that I used to only dream about. Hedge fund managers, Wall Street traders, entrepreneurs were building crazy things.
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So it got me thinking, just like Michael Milken built an empire through his network of collaborators, what could we build if we brought together the right minds? That's why we're creating a private network for ambitious thinkers, especially now with AI developing so fast, we've got to come together, compare notes and move fast. We're starting small, just a beta group. And this is not for everyone. It's for entrepreneurs and builders already making moves who want to grow with high-caliber peers.
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If that speaks to you, click the link in the description. Tell me who you are, what you're building and what kind of community you want to join.
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