The Michael Milken Project

THE ONLY WORTHWHILE RECENT INNOVATION INfinance is the ATM machine, quipped Paul Volcker in 2009. “It helps people,” Volcker said at a华尔街日报conference, and “prevents visits to the bank.” It was a clever and memorable line, as befits a former chairman of the Federal Reserve System Board of Governors. It was also totally wrong.

The greatest innovation in the recent history of finance was not the ATM, whatever the benefits of skipping the teller’s line. It was the junk bond. To this day, high-yield bonds, as they are now more genteelly known, remain a brilliant innovation because they elegantly solve a simple yet ubiquitous problem: They give companies with less than stellar credit ratings access to capital. These bonds created and grew entire industries, such as wireless communications and cable television, just as they created and grew immense pools of wealth. Their invention— combined with the packaging of credit card receivables, mortgage payments, and car loans into securitized products that loosened lending for individuals — has done nothing less than bring about the democratization of finance.

如果它是整个故事，这一事实将是一个有趣的分心。但这并不是，对于垃圾债券行业背后的男人是一个70岁的前囚犯，从他发明的游戏中禁止生命，而华尔街的最伟大的复出故事之一。

Mike Milken“彻底改变了公司 - 特别是参与企业交易的公司进行了资金，”律师事业公司的David Boies，Superlitigator和联合创始人Schiller Flexner说。“他从根本上改变了。如果你看看公司的融资方式，还有一个“迈克尔·米尔·米尔·米尔”和“迈克尔·米尔·米尔中”。

Milken’s innovation was to realize, in the 1970s, when he was only in his 20s and a graduate student at the University of Pennsylvania’s Wharton School, that investors could make more money on a risk-adjusted basis from buying the bonds issued by companies with lower credit ratings than they could by investing in the bonds of triple-A-rated companies. Milken also realized that there was an extremely limited supply of such bonds — a supply that was unlikely to meet investor demand once his discovery became public knowledge.

Armed with that insight, Milken and the firm he had joined — scrappy Drexel Burnham Lambert, successor to a Philadelphia firm once controlled by J.P. Morgan — set out to create a new supply of these so-called junk bonds by persuading often-ignored companies to issue bonds underwritten by Drexel Burnham. Not only did the firm underwrite these bonds for corporations that could not get financing from more traditional sources — banks, insurance companies, and the public equity markets — the firm’s rock star, Milken, pioneered the use of these securities to finance the huge ambitions of corporate raiders, like Carl Icahn and T. Boone Pickens, and of private equity firms, such as Kohlberg Kravis Roberts & Co. and Texas Pacific Group. “He made capital available to lots of individuals and lots of institutions that otherwise would not have access to that capital and in particular would not have access to that capital for the purposes for which they used it,” explains Boies, who once was involved in litigation, later settled, against Drexel and Milken.

Before long, the previously unknown Drexel Burnham was both advising and financing these raiders and private equity firms in their acquisition sprees. The firm was reaping huge fees, and Milken was getting rich beyond the wildest dreams of a kid who grew up in Encino, California, son of an accountant and a doting mother and housewife. But he remained hypercompetitive throughout his tenure at Drexel, perhaps to a fault. In 1986 the firm paid Milken nearly $295 million, but he still managed to complain that he had gotten cheated out of $15,000 he thought Drexel owed him. The next year the firm paid him $550 million.

More than money quibbles, the idea that other Wall Street firms would move in on his baby made Milken nuts. He hated to lose. He could not stand the thought that competitors would take market share from him. He could not stand to miss a trade. One of his faults was his willingness to do business with nearly anyone, even when he had been warned against doing so. As a result, Drexel dominated the market for high-yield finance.

“I think that hurt him,” says a former colleague who knows Milken well. “He was definitely operating in an over-the-counter securities market that had very few black-and-white rules. There are a lot more of them today than there were then. As a result, he put himself in a position — as he was trying to have massive market share in a variety of businesses — where he was operating in the gray. A lot of people say he tipped over the line from the gray.”

Someone who met Milken later in his life and spent hours with him describes his “burning eyes” and says he was “manipulative to the core” and only seemed truly happy when he believed he had won her over to his way of thinking about things. “Mike Milken was kind of like Jim Jones [of Jonestown massacre infamy] with a billion dollars, a PR man, and a fancy office,” she says.

Nothing leads to excess like success. In April 1990, after four years of investigation and prosecution, Milken agreed to plead guilty to six charges of criminal violation of securities laws — technical violations, as opposed to the original 98-count indictment that charged him with conspiracy and insider trading — and to pay a $600 million fine. He paid an additional $500 million to Drexel’s private investors who lost money when the firm was shuttered and then liquidated, also in 1990, in part as a result of Milken’s wrongdoing. He denied any miscreant behavior for years before ultimately settling with federal prosecutors.

“你愿意只犯下不太可能被发现的罪行，”美国地区凯巴伍德1990年11月在他的判刑听证会上告​​诉他。“当一个人在金融世界中的一个人。。。反复致力于违反，违反，证券和税务业务，以实现更多的权力和财富。。。需要一个重要的监狱术语。“在被判刑到十年的监狱（后来减少到两年）后，他“完全崩溃了”，根据1996年New Yorkmagazine article, and “began to shriek and wail, so loudly that it attracted the attention of people throughout the courthouse.” Apparently, the sobbing — in the arms of Milken’s wife, Lori — continued for the entire chartered-jet flight back home to Los Angeles. He ended up serving 22 months in a federal minimum-security prison. He would never be allowed to work in the securities industry again.

Yet Milken’s creation endured long after his jail term ended. Junk bonds remain an incredibly important innovation, despite the hubris (and illegality) that Milken engaged in, and a source of huge annual profits for Wall Street, which reaps a fee of about 3 percent on each underwritten offering. The Street derives countless more billions of dollars from trading high-yield bonds in the secondary markets. “The markets continue to grow,” says David Solomon, president and co–chief operating officer of Goldman Sachs Group. “Generally, the conventional wisdom was that nobody would want a bond unless it was investment grade, and he basically said, ‘You should be able to price that risk.’ He basically turned a bunch of academic theory into a practical business.”

In 2015 alone, thanks in large part to what Milken had created 30 years earlier, nearly $372 billion was raised globally for companies with less than great credit ratings. The market — for both new and existing issues — now totals some $2.2 trillion and has tripled since 2005. In 2016, according to the Securities Industry and Financial Markets Association, nearly $237 billion of new high-yield securities were issued in the U.S.

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迈克有什么非凡的米尔肯What’s remarkable about Mike Milken is that he’s still spoken of on Wall Street in mostly glowing terms, despite having served nearly two years in prison and despite not having been involved in the industry for more than 25 years. One reason is that the business Milken created remains vital and important. Another reason is that many of the people who worked for him or with him at Drexel — whether they be billionaires Leon Black, Marc Rowan, and Josh Harris, co-founders of Apollo Global Management; billionaire Tony Ressler, founder of Ares Capital Management; billionaire Ken Moelis, founder of Moelis & Co.; and John Danhakl and Jonathan Sokoloff, the wealthy co-founders of Leonard Green & Partners — have gone on to extremely successful careers of their own and credit part of their success to Milken. Another reason — and what sets Milken apart from his contemporaneous felons Ivan Boesky, Dennis Levine, and Marty Siegel, among others — is that, having been barred from the securities industry for life with a remaining net worth of about $2.5 billion, he quickly started giving it away.

米尔肯的个人叙事是一种“伟大的reversals,” says author and former Wall Street investment banker Michael Thomas: “Empowerment through disempowerment. You become disempowered in one sphere but empowered and almost as influential” in another. Milken is responsible in large part for such philanthropic efforts as the Milken Institute, a Santa Monica, California–based, highfalutin think tank whose annual conference attracts more than 3,500 people from 50 countries (“It’s the West Coast Davos,” Thomas says); the Milken Family Foundation, established in 1982 to support innovations in education, public health, and medical research; the Prostate Cancer Foundation, which gives away millions of dollars annually to scientists searching for a cure to the disease that famously afflicted Milken himself (and now is in remission); and the Milken Scholars Program, which provides four-year college scholarships to the nation’s best and brightest students.

“He did his time,” says former New York State governor and attorney general Eliot Spitzer. “He then had cancer and subsequently did things that are unambiguously good. All of that created an environment where people said: ‘Okay, he did what he did. He paid his price. He’s now giving away a lot of money, leading the charge in cancer research, and doing things that we are all behind.’ So that sounds like a good case for redemption.”

同时,米尔肯有很多朋友在业务world, in large part because he made them very wealthy when he was at Drexel. “Without in any way diminishing the significance of [Milken] pleading guilty to fraud,” Boies says, Milken’s ongoing relationships with his friends, clients, and colleagues is another reason “he continues to be an important personality” compared with the other felons of his day. During his Wall Street career Milken financed more than 3,200 companies across a wide swath of industries.

Drexel’s first junk bond financing, in April 1977, was a $30 million bond for Texas International, a small oil exploration company. Milken went on to finance Rupert Murdoch as he transformed News Corp. into an international powerhouse and Craig McCaw as he built a nationwide cellular communications company with 2 million subscribers before selling it in 1994 to AT&T for $11.5 billion. Milken helped billionaire entrepreneur John Malone grow his cable television empire and helped Bill McGowan create MCI, which competed with AT&T in the long-distance phone market. He helped create Viacom, Time Warner Cable, Telemundo, and Metromedia. Milken got billionaire Ron Perelman the money he needed to buy Revlon — the deal that put him on the map — and got Ted Turner the $1.4 billion he needed to buy MGM and start his cable TV empire.

Countless other companies, financed by investment banks other than Drexel, wouldn’t exist without the high-yield market Milken created. “What Milken did was to pierce the wall of the establishment,” says Thomas, a former longtime partner at Lehman Brothers Holdings. “He pierced the walls, and once you pierce the wall, the barbarians pour through the hole in the wall and start pricing goods for sale in the stores inside the fortress, and it’s a whole new establishment. In a way, he disrupted the financial structure in the industry, but in a way, you might also say he disrupted the social structure of American finance.”

David Solomon worked under Milken at Drexel for four years, until the firm blew up in 1990. He remembers having meetings with Milken at 6:00 a.m. New York time and wondering how his boss had the energy to drive himself so hard. “As a 25-year-old this was an entrepreneurial place where you were given an awful lot of rope, and if you were good and took the opportunities you were given, you could excel incredibly quickly,” Solomon remembers. “You could have incredible access. You could really have an impact. It was an inspiring entrepreneurial culture and a huge meritocracy.” He says Drexel allowed him to interact at an early age with CEOs, in ways that he could not have done at a more traditional firm.

当德雷塞尔爆炸时，所罗门去了Stearns Cos。，他学会了他所学的不可估量。“我有很多成功，它让我成为一个巨大的生产者，在20世纪90年代的熊叶文化中，成为一个巨大的生产者给你发电并给了你的影响力，”他说。亚慱体育app怎么下载“迈克的经验给了我一定的信心，这可能让我远远超过风险曲线，而不是我被允许在其他公司身上，但它也让我更加引人注目和生效熊叶子的一家新公司。它可能会加速我的职业生涯。“（他于1999年搬到高盛担任合作伙伴。）

Solomon says Milken remains influential because he was, and is, nothing less than extraordinary. “He’s got an incredible ability to digest information and then synthesize it and communicate around it,” he explains. “There are some people that are incredible salesmen. There are some people that are incredible traders. Mike is top decile in a whole range of skills.”

Mark Attanasio used to work in the Los Angeles office of Drexel, sharing a windowless room next to a copier machine with Jon Sokoloff. “When you’re working 15 hours a day with people, you just develop these bonds,” he says. “We’ve all got this entrepreneurial edge. So when the firm went bankrupt, we literally went in dozens of directions.” Attanasio co-founded Crescent Capital Group, a firm that invests in distressed securities, and is the principal owner of the Milwaukee Brewers baseball team. “We all stayed close, and many of us are very good friends to this day,” he says. “We compete with each other sometimes, or we have to negotiate against each other, but there’s this camaraderie that was born of that.” Attanasio says there is a Drexel alumni dinner each year at the Milken Institute conference in Los Angeles. “Everybody comes back for it,” he notes.

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IN JANUARY 1993, WHEN MILKEN FINISHED SERVING他在加利福尼亚州的讽刺意味的普通话，加利福尼亚州的翻新军营中的监狱判决，他在圣何塞东北30英里，他进入了常规体检。虽然在46岁时，他似乎保持健康，但他坚持要考虑前列腺癌。试验和随后的活检证实了乳头最担心的恐惧：他有一种特别毒性的前列腺癌，这在诊断的两年内杀死了30％的受害者。癌症蔓延到他的淋巴结，并在GLEASE规模中注册了9分，其中测量了癌症的侵略性。他有18个月的生活，并告诉他命令他的事务。（他自己的父亲已经死于黑色素瘤，尽管挤奶了寻找治愈的激烈努力。）

The former junk bond king toldTime杂志他觉得就像工作一样，弥赛亚需要“通过寻找这种疾病的治疗来”改变历史“。他随后的努力以及他的癌症正在进行的缓解已经充分记录。米勒告诉New Yorkin 1996 that he set out to “dramatically change my life and lifestyle.” He took hormones designed to shut down the production of testosterone. He slowed the pace of his work. He started meditating. He went on retreats in Massachusetts with Deepak Chopra. He hired nutritionists to create special fat-free diets for him. He built a vacation home on Lake Tahoe and used it frequently to spend more time with his family.

“I am realistic enough to know I will die,” he toldNew York21 years ago. “The job of my little body here is to make sure that that time is as far in the future as possible.” (He declined to be interviewed for this article because, his spokesman said, he was too busy preparing for his annual conference.)

Milken created the Prostate Cancer Foundation — first called the Association for the Cure of Cancer of the Prostate — soon after his diagnosis. His goal was nothing less than to change the way cancer research was being done, just as he had changed the way finance was done. He identified the best scientists and doctors and got them funding as quickly as possible, often within 90 days. Their research was made public, and Milken encouraged them to collaborate with drug companies to help design new treatments. His message: “Act with a sense of urgency.” Since its launch the foundation has raised more than $660 million and provided funding to more than 2,000 research projects at more than 200 cancer centers and universities in 19 countries around the world. Thanks to Milken, some 23 “chemically distinct” anti–prostate cancer medicines have been developed. A 2004Fortune封面故事被誉为“改变医学的男人”。

Dr. Michael Steinberg, who chairs the department of radiation oncology at the David Geffen School of Medicine at UCLA, says Milken’s cancer foundation has had an important impact. “It does a lot of seed funding for young investigators,” he explains. “It’s not gigantic. This isn’t the National Institutes of Health or anything, but as far as one of these organizations, these side-by-side nongovernmental organizations, it’s highly effective. It runs decent scientific meetings, funds decent research, and it funds young investigators as well as established investigators in a fairly rigorous way.”

David Solomon, for one, could not believe how involved Milken became when Solomon’s own father was diagnosed with prostate cancer. “The number of times that he reached out to me to check in, find out if there was something he could do or that people that were in his orbit could do, making people available, it was extraordinary,” he says. “And he didn’t do it just because it was me. He does that for so many people that he’s met along the way, and there’s a very human element in the way Mike interacts with them. He called me more than some of my good friends called me to check in about my dad.”

所罗门认为墨守的遗产不会是他对财务的深刻变化，而是通过挤奶机构，癌症研究和慈善工作统称，他统称的深刻影响。“由于市场全球化和资本更自由地移动，高收益市场可能会以某种方式存在，”索洛蒙说。“这将以一种方式，形状或形式发生。他得到了这样做的信誉。我不是故意拿走任何东西，但我认为这并不是像他在临近癌症研究或经济研究中做过慈善事业的深刻。他在世界各地创造对话。我认为迈克的生命的第二章已经存在，并将继续对商业和社会产生重大影响。“

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IN ADDITION TO BELIEVING THAT BARRING MILKENfor life from the securities industry forced him to channel his considerable intelligence and energy into more profound topics than junk bonds, Michael Thomas thinks there’s another important dividing line in Milken’s life: his decision to abandon his god-awful toupee, which he jettisoned during his prison stay.

Thomas believes this is a metaphor for how Milken’s life has evolved. He says the bald Milken is more authentic. “I think that the Milken with the hair was more Hollywood, more what you’d expect, more flash to him, more youth,” he says. “Wall Street has always prided itself on being a young man’s game. Then, after he comes out of jail, gone is the wig. It sort of implies, wouldn’t you say, that ‘This is the real me. I’m a changed guy.’”

Being barred from the securities industry helped fuel Milken’s need to carve out a new niche for himself to keep relevant. “Once he couldn’t be in finance, couldn’t buy a bank, couldn’t go to work for Goldman, couldn’t do any of those things,” Milken had to change, Thomas asserts. “It’s kind of like if we were reading the paper tomorrow that Madoff has become a rabbi. But let’s give him some benefit of the doubt, because if this were just an act, postprison, then it would be working out differently.”

添加托马斯：“别忘了，在他骑最高的几年里，他知道每个人，每个人都想认识他。当他走出监狱时，他在Rolodex的重量下弯曲了两倍。看，有各种感激之情。他有很多适当的账单，他可以打电话。他让人们富裕。他让他们变得强大。他制造了很多东西，他被迫放弃了他的魔杖。“