This post is part of a feature in which we wonder whatever happened to some notorious financial felons. See all 17.
Ah, for the simple days of the 1980s. Way back then, the crimes of greedy traders were obvious and unambiguous, and the crooks had the decency to look the part. Few played the role of the greedy financier as well as Ivan Boesky, who went all the way from immigrant's son to millionaire investor to disgraced jailbird. I only wish our current financial crooks played their parts as well.
Ivan Frederick Boesky rose to fame and fortune taking huge positions in companies that were soon to be taken over. He was quite successful during the merger mania that drove the 1980s boom market, and by 1986 he was worth over $200 million, which was real money back before hedge funds took over the world. The only problem was that he was trading on inside information, which while enormously profitable has the distinct disadvantage of being completely illegal.
Boesky was not subtle in his approach, often buying tens of thousands of shares in a company at a premium just days before the company announced a takeover. The share price would jump and Boesky would quickly cash out. The typically somnambulant SEC eventually took notice, and Boesky was caught red-handed in 1986 and charged with stock manipulation and insider trading. He paid a fine of $100 million and spent nearly two years in the (minimum security) slammer. He also sang like a bird to the SEC, providing enough information about crooked dealings on Wall Street to almost single-handedly bring the 1980s boom to an end.
Boesky has become a cultural touchstone. He is apparently the inspiration for the Gordon Gecko character in the film Wall Street. Gecko's famous "greed is good" line is a reworking of Boesky's statement, "I think greed is healthy. You can be greedy and still feel good about yourself." Little did Boesky know that his words would be repeated endlessly by Wall Street boosters every time the stock market goes up for more than a few days.
No word on how Boesky is feeling about himself these days, though he claims to have lost everything, including the Beverly Hills Hotel, which he owned for a while in the 1980s. Some believe that Boesky managed to put a few million away overseas and is sitting pretty in southern California. But a blog written by a SUNY business school professor claims that Boesky is broke and has been reduced to living on alimony from his heiress ex-wife. Beats jail, I suppose, but it's a long way down for a former king of finance.