Early Life and Education
Michael Milken was born on July 4, 1946, in Encino, California. From an early age, Michael’s diligence and work ethic set him apart. He showed leadership as head cheerleader of Birmingham High School despite facing challenges like early hair loss in his teens. Milken went on to earn a bachelor’s degree from the University of California, Berkeley, in 1968, followed by an MBA from the University of Pennsylvania’s Wharton School of Finance.
The Rise of the Junk Bond King
Innovating High-Yield Bonds
At Drexel Burnham Lambert, Milken developed a groundbreaking high-yield bond trading department. His knack for investing in bonds issued by companies with poor credit ratings led to high returns, not just for investors but also for the companies, which found new ways to access capital. This catalyzed the American economy and garnered massive profits for Drexel Burnham Lambert, helping the institution control a staggering 70% of the junk bond market in the 1980s.
Milken’s proficiency in handling leveraged buy-outs, hostile takeovers, and high-yield bond issues earned him immense wealth—reportedly topping $550 million in 1987 alone.
Unprecedented Earnings and Scrutiny
As Michael Milken’s influence grew, so did concerns over the role of unchecked financial power. His extraordinary compensation became a focal point of Wall Street discussions, symbolizing a period of significant financial engineering that some saw as troubling.
The Downfall: Securities Fraud and Imprisonment
In 1986, Drexel Burnham Lambert’s client Ivan Boesky was convicted of insider trading and implicated Milken. By 1988, Milken and his employer faced charges of securities fraud. In 1990, Milken pleaded guilty to six felony counts, resulting in a 10-year prison sentence, a $600 million fine, and a lifetime ban from the securities industry by the Securities and Exchange Commission (SEC). Drexel Burnham Lambert also declared bankruptcy that year.
Due to good behavior and cooperation against former colleagues, Milken’s sentence was reduced to two years. Once released, Milken sought redemption and furthered his influence as a strategic consultant, despite occasional legal setbacks, before receiving a full pardon by President Donald Trump in 2020.
A New Chapter: Philanthropy and Legacy
The Milken Family Foundation
Founded in 1982, the Milken Family Foundation focuses on supporting education and medical research. Through this foundation, Milken has channeled significant resources into awarding prizes to exceptional K-12 educators and providing financial aid to college-bound students.
Author and Educator
Michael Milken extended his influence into literature by writing a series of books, particularly after being diagnosed with prostate cancer. One notable work is The Taste for Living Cookbook: Mike Milken’s Favorite Recipes for Fighting Cancer, reflecting his personal journey and commitment to health advocacy.
The Legacy of Michael Milken
From infamous
Related Terms: junk bonds, securities fraud, high-yield bonds, Wall Street, philanthropy, medical research.
References
- Britannica. “Michael Milken”.
- The Gentleman’s Journal. “The Story of Michael Milken: the Junk Bond King”.
- Kornbluth. “Highly Confident: The Crime and Punishment of Michael Milken”.
- Linda Brewster Stearns and Kenneth Allan. “Economic Behavior in Institutional Environments: The Corporate Merger Wave of the 1980s”. American Sociological Review, Vol. 61 (4): 699-718.
- Encyclopedia.com. “Drexel Burnham Lambert Incorporated”.
- The New York Times. “Wages Even Wall St. Can’t Stomach”.
- Washington Post. “Who Is Michael Milken The Junk Bond King Trump Just Pardoned?”
- Encyclopedia.com. “Milken, Michael R”.
- Forbes. “Michael Milken”.
- Milken Institute. “About Us”.
- Mikemilken.com. “Biography.”
