Ivan Boesky: The Insider Trading Scandal That Inspired Gordon Gekko

Got something to say to this podcast? Send a voicemail, and you might hear yourself on the next episode!

Ivan Boesky told graduating business students at UC Berkeley that the desire for wealth was healthy. Months later he was on the cover of Time under the headline Ivan the Terrible, headed for federal prison. This episode follows the Detroit deli owner's son who earned a law degree without finishing college, married Seema Silverstein, the daughter of a wealthy real estate magnate, and used 700,000 dollars of her family's money to open his own Wall Street firm in 1975.

Boesky became the king of risk arbitrage, betting on the outcome of corporate takeovers, and built a fortune of more than 200 million dollars by 1986. His uncanny timing had a simple explanation: investment bankers were feeding him confidential news of pending deals. When the scheme unraveled he paid a record 100 million dollar fine, was barred from the securities business, and turned informant against figures including Michael Milken. His case ended an era when insider trading laws were rarely enforced.

• Risk arbitrage means buying a takeover target's stock below the offer price and collecting the gap if the deal closes. Boesky removed the risk by learning outcomes in advance.
• Bankers Robert Wilkis and Ira Sokolow passed him nonpublic information on deals involving Nabisco Brands, R.J. Reynolds, and Houston Natural Gas.
• A large share of his wealth, 136 million dollars, came from a lawsuit he and Seema won against her sister and brother-in-law for control of the Beverly Hills Hotel.
• He was sentenced to three and a half years and served 20 months at Lompoc, California. His Berkeley speech became a model for Gordon Gekko's monologue in the 1987 film Wall Street.
• In their 1991 divorce Seema agreed to pay him 23 million dollars plus 180,000 dollars a year. He died in May 2024 at 87.