Ivan Boesky is the money-loving inside trader whose behaviour in the 1980s inspired the famous fictional Wall Street character Gordon Gekko. In just under 25 years, Boesky went from serving as a law clerk in Detroit to being the man who almost single- handedly killed the Wall Street boom era of the 1980s.
Boesky’s journey from college failure to Wall Street workaholic is one of a man who was addicted to money and the life lifestyle it provided.
And today, at the age of 75, he’s not in bad financial shape either.
At the age of 25, Boesky married Seema Silberstein of Detroit in 1962.
Her father, Ben Silberstein, knew that Ivan liked Seema for her family's money, and he frequently called him 'Ivan the Bum'.
Ben Silberstein said that Ivan had 'the hide of a rhinoceros and the nerve of a burglar'.
After that, he served as a general partner at Edwards & Hanly from 1972 to 1975.
But, Ivan wanted his own securities business.
One Sunday morning in the late 1970s, as the couple tried to dodge an expensive tax bill from the state of Connecticut, they moved from Greenwich, CT to a 200 acre Westchester County, New York estate.
Ivan chose one of the most expensive homes in Westchester County, which they purchased for $850,000.
The Boeskys purchased the home from the Revson family of Revlon, who had purchased it from the newspaper publishing Cowles family, and the Strausses of Macy's had built the massive estate.
At this estate, Boesky and Seema raised their four handsome children.
Ivan Boesky profited from arbitrage trades of company stocks that were going to be acquired. He would learn that a company was soon to be purchased, so he would purchase the company's stock before the deal was made public and the stock price soared to the acquisition price.
This type of trade is completely legal, as long as all of the information has been made public. But, Boesky wanted an edge, so he cheated and traded off of exclusive, inside information.
It is estimated that Boesky made $65 million in 1984 when Chevron purchased Gulf and when Getty was purchased by Texaco.
He also made about $50 million in 1985 when Philip Morris acquired General Foods.
The man with the best knowledge of leveraged buyouts in the 1980s was Michael Milken of Drexel Burnham. Milken and Drexel would both underwrite debt for leveraged buyouts and would trade the high-yield, high-risk, junk-bonds that were used to finance leveraged buyouts.
Boesky would typically receive inside information about scheduled buyouts from junk-bond traders and takeover artists, and would cut a deal with the informant for a percentage of his profits from his arbitrage trades.
Boesky raised over $640 million in debt capital through Milken and Drexel, and used that money to place arbitrage trades, many of which were bets on Drexel's buyout deals.
At the height of Boesky's success in the mid 1980s, he had over $3 billion in a limited partnership which was primarily funded by debt.
He typically held positions in 75-100 stocks, hoping that the price of one stock would spike as a merger announcement neared.
Boesky maintained a staff of over 100 in his Fifth Ave office. But, some believe that his staff was used as a smoke screen, because he made many of his big trades based on inside information that he bargained for.
And, he was not discreet about many of his large positions. Boesky would often buy tens of thousands of shares of a company just a few days before a takeover deal was announced.
He frequently had a phone balanced on each shoulder, while he had eight people waiting on his 300 phone lines.
In an article by People Magazine, the author said that Boesky lived lavishly, but worked like he was in a sweatshop.
During the 1980s, Seema and Ivan were worth over $280 million and placed on the Forbes 400 wealthiest American list. Boesky didn't follow the normal 20% of profits and 2% management fee that most hedge funds follow. He took home a fat 50% of the profits.
Ivan reportedly visited one of the most expensive restaurants in New York at the time, and ordered every single entrèe on the menu, only to barely taste each item.
After Boesky was fined, he had The Jewish Theological Seminary take his name off of its new $20 million library in upper Manhattan, that he had pledged more than $2 million towards.
He served as an adjunct professor at Columbia's and NYU's graduate schools during the 1980s.
In 1985, he published a book about arbitrage, titled Merger Mania-Arbitrage: Wall Street's Best Kept Money-Making Secret. Boesky hoped that the book would help provide answers for people who failed to understand how he aggressively made his millions during the take-over era.
Boesky spoke at the School of Business Administration at Berkeley commencement in May of 1986.
'Greed is all right, by the way. I want you to know that. I think greed is healthy. You can be greedy and still feel good about yourself.'
People in the audience laughed and applauded following Boesky's speech.
During the mid 1980s, the US government was desperately trying to put a stop to the leveraged buyout as the boom tore apart companies and communities.
The federal investigators knew that if Milken and Drexel Burnham fell, then the entire junk-bond market would freeze up and the leveraged buyout era would end.
In 1986, investigators discovered Dennis Levine, a managing director at Drexel Burnham, who had been distributing inside information.
In May of 1986, during the month Boesky gave his famous 'greed is good' speech at Berkeley's commencement, Dennis Levine of Drexel Burnham was arrested for insider trading.
Soon after Levine fell to the federal investigators, Boesky was on the hook for buying insider information from Drexel and Levine.
In September of 1986, Boesky secretly struck a deal with the federal investigators, banning him from dealing securities, and to help bring down the insider trading network, rocking Wall Street. He also had to pay a $100 million fine.
Through wire taps and tape recordings via Boesky, investigators were able to charge 14 individuals and more than five major brokerages with securities law violations. Michael Milken was one of the biggest players involved.
Before the government announced Boesky's fraud charges November 14, 1986, he was allowed to sell an estimated $1.6 billion in stocks and repay debts.
Rudolph Giuliani and the US Attorney's office stated in Boesky's memorandum that:
Not since the legislative hearing leading to the passage of the 1933 and 1934 Securities Acts has the Government learned so much at one time about securities law violations.
Boesky only served 22 months before being released for good behaviour.
He had provided the federal investigators with so much information on the fraud in the securities industry, that he almost single handedly ended the 1980s boom era.
Seema filed for divorce in 1991 and agreed to pay Boesky a substantial alimony of $23 million and $180,000/ year for life.
In an interview with Fortune in 1984, Boesky said that he owned private companies in Bermuda and held business interests in France.
Following his release from prison, he enrolled in a rabbinical studies school and devoted large chunks of his time to helping the homeless.
Today, at 75 years old, Ivan Boesky lives with his new wife Ana in La Jolla, CA.
Semma and Ivan have four offspring; one son is a therapist, one teaches, one develops real estate and their daughter deals contemporary art.
We did a little snooping and Google Earthing to find his house. According to our research and an address search in White Pages, Ivan Boesky lives in the pictured home that has views of the Pacific Ocean.
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