Milken is a philanthropist, financier, medical-research innovator, author, foundation executive, public health advocate, corporate officer, husband, father and grandfather. His philanthropy began in the s and was originally focused on breast cancer, melanoma and childhood neurological disorders. Put “urban legends” into a search engine and hundreds of such irrational beliefs appear. The rule of thumb in the gaming industry is that every job created within the industry creates more than three additional jobs in the local economy. His financial innovations created millions of jobs. That revolution broke the stranglehold of “establishment” lenders and shifted power from non-stockholder corporate managements to stockholders.
None of these violations involved insider trading. Drexel’s strong franchise in low-rated debt didn’t materialize overnight. Other defendants in cases similar to Milken’s fought charges for as long as a decade, and eventually prevailed. Given the breadth of Milken’s activities before and after the flurry of media attention to his Wall Street career, it’s a phrase that overlooks four decades of leadership in medical-research and public health advocacy, not to mention Milken’s pioneering use of complex capital-structure strategies involving equity-based financial instruments and other securities. At pre-sentencing hearings, the prosecution was invited to show its best evidence, after more than four years of intensive investigation, of more serious violations, including insider trading. His real contribution was to get investors to understand that the stock and bond markets were not really separate markets.
Milken created a tremendous pool of liquidity and guided its use with surgical precision. In the late s, Milken, now a year-old senior vice-president, demonstrated in his MBA thesis for the University of Pennsylvania’s Wharton School that companies with debt rated B or less were far less prone to bankruptcy than most people had assumed.
One value of the raiders is that they serve as the ultimate cops on the financial market beat, searching out and destroying flab and inefficiencies. This is an example of what academics call “the agency problem,” which removes incentives to use stockholders’ assets efficiently. These takeovers improved the quality of management at less-efficient companies and helped the economy, making it more dynamic and innovative.
Along with Warren Buffett, Bill Gates and others, he has signed The Giving Pledge, committing to distribute most of his wealth to charities during his lifetime.
On a typical day, he commutes 20 minutes from his San Fernando Valley home once the residence of Clark Gable to be in Drexel’s Beverly Hills trading room by 5 a. Glib references to the michae bond king” perpetuate a one-dimensional caricature of a multi-dimensional financial innovator. He showed up in people’s offices with suitcases full of cash. In fact, four of the five were found by the judge to have had zero economic effect.
Michael Milken – Myths
In those days, there was very little innovation. Programs and contributions by the Milken Family Foundation have made a difference in the battle against several grave conditions, including breast cancer and epilepsy. With Milken, business competitors egged on prosecutors. In the s, Milken supported the pioneering tgesis of Dr.
Is it any wonder that politicians felt pressure to stop Milken’s revolution? The bigger threat wasn’t takeovers; it was faster-moving competitors that challenged large, established businesses. In a public-relations campaign that glossed over their own behavior that had inflated expenses, they claimed they were victims of “greedy raiders” financed by Milken. This was 20 years before his cancer diagnosis and a decade before any legal issues arose.
Finally, non-competitive but entrenched corporate managements who used stockholders’ assets inefficiently had much to fear from stockholders who wanted to replace them with managers who could allocate company resources more effectively. Noting this fact, the Journal’s late editor, Robert L.
And the truly culpable parties can get off lightly by conning prosecutors with the promise of bigger fish. The Milken Family Medical Foundation was established in and provided grants to keep many young cancer researchers in their labs when they were tempted to pursue more-lucrative clinical practices. Some features of this site may not work without it.
In the words of Wharton School management professor Daniel Raff, “the capital markets roused from their critical slumber. It advanced shareholder value from which everybody gained. Beneficiaries of Milken’s philanthropy.
Milken was hated by the corporocrats for making it possible for social outsiders – many of them ‘young, aggressive and Jewish,’ according to one description, and therefore ineligible for membership in the better clubs – to take over sleepy companies.
Put “urban legends” into a search engine and hundreds of such irrational beliefs appear. Along comes Drexel, a firm with a visionary purpose, and suddenly you could get capital.
What Went Wrong: An Examination of Drexel Burnham Lambert’s Descent into Bankruptcy
He originally faced a count indictment including insider trading chargeswhich the Justice Department knew would not stick. Some uninformed reports have confused the fictional character of Gordon Gekko in the Wall Street movies with Milken. These large businesses were major contributors to political campaigns, and their armies of employees could be mobilized to write their Congressional representatives in defense of the status quo.
Bert Vogelstein, who did pioneering work on the incalculably important p53 gene whose mutant form is believed to be involved wharyon more than half of human cancers; Dr.
Lawrence Einhorn, who micahel a virtual cure for testicular cancer; Dr.
So the department managed to coerce Milken to plead guilty to trivial offenses.