MILKEN, Michael
American financier who pioneered the high-yield bond market and was convicted of securities violations in the 1980s junk bond scandal, becoming a symbol of Wall Street excess during the Reagan era.
Michael Robert Milken revolutionized corporate finance during the 1980s through his development of the high-yield bond market at Drexel Burnham Lambert. Known as the "Junk Bond King," Milken created a secondary market for below-investment-grade corporate debt, fundamentally altering how companies raised capital and enabling leveraged buyouts that reshaped American business.
Milken's innovations allowed smaller, growing companies to access capital markets previously reserved for established corporations with investment-grade credit ratings. His success at Drexel's Beverly Hills office generated enormous profits, with Milken earning over $550 million in 1987 alone, making him one of the highest-paid individuals in American business history.
However, Milken's empire collapsed amid federal investigations into securities fraud, insider trading, and market manipulation. The government alleged that he used his market position to engage in illegal schemes with clients like Ivan Boesky and corporate raiders. In 1990, Milken pleaded guilty to six felony counts and was sentenced to ten years in prison, though he served only 22 months.
Despite his conviction, Milken's influence on finance proved lasting. His development of high-yield debt markets democratized corporate finance and funded technological innovations that drove economic growth. Following his release, Milken became a prominent philanthropist focusing on medical research and education, though his legacy remains controversial within financial circles.
Bibliography:
- Stone, Dan G. 'April Fools: An Insider's Account of the Rise and Collapse of Drexel Burnham'
- Kornbluth, Jesse. 'Highly Confident: The Crime and Punishment of Michael Milken'
- Bruck, Connie. 'The Predators' Ball'
- Stewart, James B. 'Den of Thieves'