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1-Page Summary of Den Of Thieves
Merger Mania and a Frenzy of Greed
The greed of the 1980s was shocking to many people. The scandal involved high-ranking businesspeople who committed crimes in order to make more money. One of the most shocking elements were the sheer size and scope of these crimes, including Michael Milken’s $600 million fine for insider trading and Ivan Boesky’s $100 million fine for illegal gains. Some people also felt that it was wrong because everyone on Wall Street did it; Dennis Levine made millions through insider trading as well, but he had to pay a much smaller price than some others. Others thought it was outrageous simply because they already had so much money—Boesky made over $100 million by himself—and still wanted more.
During the 1980s, Wall Street was in a low point. This was partly due to Milken’s actions and his new source of cash – junk bonds. Companies would buy other companies with these high-risk bonds, which made them more vulnerable to hostile takeovers. The takeover bids were irrational because they ignored the transparent arm’s length transactions that are prized by open markets. Instead, Milken often pulled strings during the deals and forced people into buying his clients’ low-grade bonds. This led to a merger mania where investors became insanely rich as they could spot takeover targets before anyone else knew about them. Levine also got involved in this deal sharing ring as he set up employees at various Wall Street firms who shared information about impending deals.
Levine’s Information Ring
The scandals that engulfed Wall Street in the 1980s might have gone undetected if not for the careless crimes Levine committed. An overweight, unkempt native of Queens, Levine started his career at Citicorp in the 1970s but never impressed his bosses. A few years after being passed over for a promotion, he joined Smith Barney and landed what many would consider a plum assignment in Paris. But Levine brooded; complaining that he was too far from the action and from insider information everyone else on Wall Street used to personal advantage. He set up an anonymous Swiss bank account to trade stocks using insider tips just in case nosy U.S regulators checked on his activities. By the time he returned to New York, Levine had increased his stake to $100,000
Levine was ambitious and wanted to rise up the ranks of investment banking. However, he had little experience in finance and his bosses thought him incompetent because they could see that he wasn’t good at reading balance sheets. He tried to get people like Robert Wilkis who were insecure or greedy enough to join Levine’s insider trading scheme by showing them how everyone else on Wall Street was doing it too. Eventually, Wilkis gave in and joined Levine’s ring of insiders after being badgered for a long time. Meanwhile, Levine recruited other moles from other banks into the scheme as well.
Soon after Levine started at Lehman Brothers, he was tipped off to a pending takeover bid by Citron. He says that his reading of trading volumes convinced him that the company was in play and he told them so. They hired Lehman as their adviser for $2.5 million and he bought 27,000 shares in anticipation of profit from the deal. This is when Levine also began cashing out stocks with friends and associates for millions in profits over several years. He even struck up a relationship with Ivan Boesky who would call him on insider information deals. Despite tips not to flaunt wealth, Levine bought a Ferrari Testarossa worth $105,000
Levine felt the need to turn in his illegal profits because he was worried about being caught. Levine joined Drexel Burnham Lambert’s New York office in 1985 as a deal maker, but his high-flying days were numbered. Merrill Lynch investigated an anonymous tip that brokers were trading on insider information, and it fired those brokers. However, Merrill couldn’t make sense of the scheme, so they turned over the investigation to SEC (Securities and Exchange Commission). The SEC found out that Levine had been involved in this scheme and questioned him about it. He lied his way out of trouble then before but this time did not lie successfully enough to get away with it. In 1987, Levine was sentenced to two years in prison for insider trading and ordered to pay $362,000 plus another $11 million that he owed from the scheme which he turned over voluntarily.
