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Den of Thieves (Paperback)
by James B. Stewart
| Category:
Insider trading, Wall Street, Scandal, Stock market |
| Market price: ¥ 200.00
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¥ 178.00
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| MSL Pointer Review:
A damningly detailed account of the predatory conspirators whose willful violations of securities law and ethical standards gave Wall Street a deservedly bad name during the takeover frenzy of the 1980's. |
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Author: James B. Stewart
Publisher: Simon & Schuster
Pub. in: September, 1992
ISBN: 067179227X
Pages: 592
Measurements: 8.4 x 5.6 x 1.4 inches
Origin of product: USA
Order code: BA00093
Other information: Reprint edition
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- Awards & Credential -
The #1 National Bestseller in North America from a Pulitzer Prize winner. |
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- MSL Picks -
The 1980's were known as the "Greed Decade.” James Stewart's book, Den of Thieves provides a comprehensive, fascinating and readable look at the insider trading scandals of the 1980's which brought words like arbitrageur and LBO into the mainstream and people like Boesky and Milken household names.
Stewart begins by looking at the rise of some of Wall Street's highest fliers and, in many cases, providing exhaustive details of how the prevailing mantra of "greed is good" led them to orchestrate their own downfall. The audacity of many of these people is almost breathtaking, as is the wealth they accumulated. Stewart moves on to detail the process by which the government, in the form of the SEC and then-US Attorney Rudy Giuliani (later Mayor of New York City), brought this house of cards tumbling down.
Overall, this is a fascinating and well written book which raises fundamental questions about the way business was, and is, conducted and the way in which the justice system operates. MSL highly recommends it as the definitive account of the insider trading scandals of the 1980s.
Target readers:
Investment bankers, MBAs, finance majors, and anyone else who is interested in investment banking, stock market, the Wall Street, and financial markets.
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James B. Stewart, front-page editor of The Wall Street Journal, is the author of The Partners and The Prosecutors. He was awarded the 1988 Pulitzer prize with Daniel Hertzberg for their stories on the 1987 stock market crash and the insider-trading scandal. He lives in New York City.
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From Publisher
A number-one bestseller from coast to coast, Den of Thieves tells, in masterfully reported detail, the full story of the insider-trading scandal that nearly destroyed Wall Street, the men who pulled it off, and the chase that finally brought them to justice. Pulitzer Prize winner James B. Stewart shows for the first time how four of the biggest names on Wall Street - Michael Milken, Ivan Boesky, Martin Siegel, and Dennis Levine - created the greatest insider-trading ring in financial history and almost walked away with billions, until a team of downtrodden detectives triumphed over some of America's most expensive lawyers to bring this powerful quartet to justice.
Based on secret grand jury transcripts, interviews, and actual trading records, and containing explosive new revelations about Michael Milken and Ivan Boesky written especially for this paperback edition, Den of Thieves weaves all the facts into an unforgettable narrative - a portrait of human nature, big business, and crime of unparalleled proportions.
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Chapter 1
Martin Siegel, the youngest member of the class just graduated from the Harvard Business School, reported for work at Kidder, Peabody & Co.'s Manhattan headquarters at 20 Exchange Place in August 1971. That morning, the 23-year-old Siegel wandered through the halls looking at the portraits of Henry Kidder, Francis Peabody, Albert R. Gordon, and others that hung above the Oriental rugs and slightly threadbare carpets. Siegel tried to absorb the images of this strange and rarefied world of old money and discreet power.
He didn't have much time for reflection. He and his new wife hadn't even unpacked before he was thrown into a day-and-night project to win some new underwriting business from the Federal National Mortgage Association. Siegel's partner on the project made little impression on him, except for his name: Theodore Roosevelt IV, or maybe V; Siegel could never remember which.
In 1971, with the Vietnam War still raging and spurring opposition to the Establishment, few top students were going to business school, let alone Wall Street. Siegel, one of the top graduates in his Harvard class, had had his pick of nearly every major investment bank and securities firm. He had applied to 22; all had shown interest.
Kidder, Peabody, with about $30 million in total capital, barely ranked in the country's top 20 investment firms. In the hierarchy of Wall Street, Kidder, Peabody was in the second-tier, or "major" bracket. It didn't rank in the elite "special" bracket with Salomon Brothers, First Boston, Morgan Stanley, Merrill Lynch, or Goldman, Sachs.
Though the winds of change were apparent in 1971, Wall Street was still split between the"Jewish" and the "WASP" firms. At an earlier time, when major corporations and banks had discriminated overtly against Jews, Wall Street had rewarded merit and enterprise. Firms like Goldman, Sachs, Lehman Brothers, and Kuhn Loeb (made up historically of aristocratic Jews of German descent) had joined the ranks of the most prestigious WASP firms: Morgan Stanley - an outgrowth of J. P. Morgan's financial empire - First Boston, Dillon, Read, and Brown Brothers Harriman. Giant Merrill Lynch Pierce Fenner & Smith, something of an anomaly, had once been considered the "Catholic" firm. Kidder, Peabody remained firmly in the WASP camp. Siegel was the first Jew it hired in corporate finance.
Siegel was looking for variety and excitement. Only investment banking offered the prospect of an immediate market verdict on a new stock issue or the announcement of a big acquisition. He had narrowed his choices to three firms: Goldman, Sachs, Shearson Hayden Stone, and Kidder, Peabody. A Goldman recruiting partner phoned, and asked, if Goldman made him an offer, would he accept? Siegel didn't commit. Shearson Hayden Stone offered him the largest salary - $24,000 a year.
Kidder, Peabody offered only $16,000. But Siegel saw unique opportunities there. The firm was full of old men, but had a roster of healthy blue-chip clients. Siegel envisioned a fast climb to the top.
Kidder, Peabody's aristocratic aura appealed to Siegel. One of America's oldest investment banks, it was founded in Boston as Kidder, Peabody & Co. in 1865, just before the end of the Civil War. Early on, Kidder raised capital for the railroad boom, primarily for the Atchison, Topeka & Santa Fe. Its clients also included two stalwarts of establishment respectability, United States Steel and American Telephone & Telegraph.
The modern Kidder, Peabody was dominated by Albert H. Gordon, the son of a wealthy Boston leather merchant, and graduate of Harvard College and Business School. In 1929, when the firm was devastated by the market crash, Gordon, a young bond salesman at Goldman, Sachs, stepped in with $100,000 of his own capital. Along with two partners, he acquired the firm in 1931.
The indefatigable Gordon, a physical-fitness fanatic with limitless energy and impeccable Brahmin bearing, moved the firm's headquarters to Wall Street from Boston and set about building a roster of clients. He had an advantage: Kidder, Peabody's reputation, in sharp contrast to many of its rivals, had remained remarkably unsullied in the aftermath of the crash.
The shock of the crash and the Depression had set off a reform movement in Congress culminating in Senate hearings conducted by special counsel Ferdinand Pecora beginning in 1932. Through Pecora's withering cross-examination of some of Wall Street's leading investment bankers, the American public learned about insider trading, stock-price manipulation, and profiteering through so-called investment trusts. Most of the abuses uncovered involved information bestowed on a favored few and withheld from the investing public. It was not only information that directly affected stock prices, such as the price of merger or takeover offers, but information that could more subtly be turned to a professional's advantage: the true spread between prices bid and prices asked, for example, or the identities of buyers of large blocks of stock and the motives behind their purchases.
In the wake of widespread public revulsion and populist fury, Congress passed historic legislation, the Securities Act of 1933 and the Securities Exchange Act of 1934. A new federal agency, the Securities and Exchange Commission, was created to enforce their provisions. Congress deemed the enforcement of its new securities laws to be so important that it enacted corresponding criminal statutes.
By separating banking from securities underwriting, the raising of capital, and distribution of stocks, bonds, and other securities, the securities acts set the stage for modern investment banking. Under Gordon's guidance, Kidder, Peabody concentrated on its underwriting function. The firm was a pioneer at opening branch offices in U.S. cities. The idea was, as Gordon liked to put it, to "sell your way to success."
Through most of its history, Kidder, Peabody was a tightly controlled partnership, with Gordon personally owning most of the firm and its profits. When the firm incorporated in the 1960s, the ownership changed little; Gordon simply became the firm's largest shareholder. He was parsimonious about bestowing ownership stakes on the firm's executives.
Kidder, Peabody prospered, if not spectacularly, under Gordon's conservative leadership. Determined to avoid another capital crisis, Gordon insisted that Kidder's executives plow their earnings back into the firm. This gave the firm the capital to survive the sudden drop in trading volume and profits that struck Wall Street in 1969. A Kidder vice president, Ralph DeNunzio, served as vice chairman of the New York Stock Exchange and helped arrange the merger of such old-line houses as Goodbody & Co. and du Pont. DeNunzio became chairman of the stock exchange in 1971, the same year Siegel graduated from Harvard Business School.
Martin Siegel's lineage was modest in contrast to that of the leaders of Kidder, Peabody. His father and an uncle owned three shoe stores in Boston, outlets that relied on American suppliers and catered to middle-to-working-class tastes. In the late sixties and early seventies, the stores were devastated by chains benefiting from national advertising and low-cost foreign suppliers. This was painful for Siegel, who had never seen anyone work so hard for so little as his father. As a kid growing up in Natick, a Boston suburb, he had almost never seen his father, who worked seven days a week, often spending the night in the city. Unlike his classmates' fathers, Siegel's father never played ball with him.
Siegel wasn't good at sports in school; he started first grade a year early, so his physical development lagged behind his classmates'. But starting as a freshman in high school, he excelled academically. He thought he wanted to be an astronaut. When Siegel was accepted in his junior year of high school for a work-study program at Rensselaer Polytechnic Institute, a science and engineering college, he became the first member of his family ever to attend college. He continued to do well academically even while working part-time, and entered a master's program in chemical engineering in 1968. He knew he'd never become rich toiling as an anonymous engineer in a corporate laboratory, so he applied to Harvard Business School and was accepted for the class entering in September 1969.
The turmoil sweeping American campuses during the late sixties had had remarkably little effect on Siegel, but at Harvard, he was caught up in the antiwar movement after the U.S.-led invasion of Cambodia in 1970 and the killings of students at Kent State by the Ohio National Guard. He participated in an antiwar sit-in in Harvard Yard and smoked marijuana cigarettes a few times. Still, he was annoyed when students managed to get that year's final exams canceled. He took his anyway, exercising an option to take the exams at home and submit them by mail.
For his senior thesis, Siegel tackled the mounting woes of his father's shoe store business. His solution: The stores should be transformed into specialty high-end boutiques, catering to wealthy, fashion-conscious women. This would avoid the growing competition in the rest of the market. Siegel's father agreed in principle, but then his brother, who did the buying for the stores, had a heart attack. His father didn't have the eye or instincts for high-fashion retailing, but Siegel's thesis earned "distinction-plus," Harvard's equivalent of A +.
On the Fourth of July 1970, Siegel married Janice Vahl, a music student from Rochester he'd met two years earlier. After Siegel accepted Kidder, Peabody's offer, he and Janice moved to New York, paying $212 a month for a modest one-bedroom apartment on Manhattan's East 72nd Street.
Siegel took naturally to Wall Street and investment banking; his energy and drive were, as he had predicted, a breath of fresh air at Kidder, Peabody. DeNunzio, now Kidder, Peabody's chief operating officer, seemed early on to have taken favorable notice of his new employee. He too came from a modest background and seemed far more comfortable with earthy sales and trading types than he was with upper-crust investment bankers.
Siegel began working on some merger-and-acquisition transactions, since no one else at Kidder, Peabody was eager to get involved. Hostile takeovers bore an unsavory taint. They generated bad feelings, especially toward those who represented the attackers. This sometimes alienated other clients. Many of the WASP investment banks and law firms preferred to leave such work to the other firms, many of them Jewish.
None of this bothered Siegel. His first takeover deal came just after the passage of the Williams Act, which spelled out new procedures to protect shareholders from coercive takeover tactics. The deal was an unsuccessful bid by Gulf + Western's acquisitive Charles Bluhdorn, a longtime Kidder, Peabody client, for the Great Atlantic & Pacific Tea Co. Bluhdorn, who was close to DeNunzio, praised Siegel's work, and DeNunzio made sure that Siegel was assigned to another major client, Penn Central's Victor Palmieri. In 1974, recognizing the dearth of expertise in the area, Siegel wrote a textbook on mergers and acquisitions for use within Kidder, Peabody; it was hailed by his colleagues. In only two years, he was promoted to an assistant vice president.
As Siegel's career took off, trouble developed in the rest of his life. His father's business continued to worsen; Siegel flew to Boston almost every weekend to help. His marriage suffered. Janice sang with the Bel Canto opera in New York and wanted to pursue a musical career. Siegel, who had no interest in opera, gave her little support. In February 1975 they separated.
Shortly before, his father's bank and principal lender had pulled the plug on the Siegel shoe business. Robert Siegel's company filed for bankruptcy. The once-proud and energetic retailer became, at 47, a broken man. He tried selling real estate; that didn't work out. He tried doing house repairs. Finally he landed a job selling roofing at Sears. Siegel watched with alarm as his father seemed to give up on his own life. He noticed the older man beginning to live vicariously through the sons and daughter he had once never had time for.
Siegel was haunted by the possibility that something similar might happen to him. He vowed he would never wind up a broken man.
After his father's misfortune, Siegel plunged even more completely into his work, frequently logging 100-hour weeks. Emulating Gordon, still titular head of the firm, he embraced physical fitness. One of his contemporaries at the firm, a former all-American wrestler named Scott Christie, put him through a fitness regimen at the New York Athletic Club. At one point, Christie, Siegel, and John Gordon, Al Gordon's son, were standing in a corridor at the firm when Siegel boasted that he could do 50 push-ups in a minute. Christie squeezed Siegel's bicep and rolled his eyes skeptically. "Come on, Marty." With that, in his shirt and tie, Siegel dropped to the floor. He did the 50 push-ups in less than a minute.
Handsome Martin Siegel became Kidder, Peabody's golden boy. He bought an Alfa-Romeo convertible and a beach house on Fire Island, a popular resort off Long Island. He became socially poised and gregarious. DeNunzio, awkward and physically unprepossessing himself, shrewdly recognized in Siegel a talent for getting and nurturing clients, DeNunzio's major weakness. He made Siegel a full vice president in 1974, and soon Siegel was reporting directly to DeNunzio. When Kidder, Peabody client Gould Inc. made a cash tender offer for a valve manufacturer around Christmas 1975, DeNunzio assigned Siegel to work with the legendary Lazard Freres financier Felix Rohatyn, who was representing the target company. Siegel was reticent at first; he was in awe of Rohatyn. Then, during a meeting, Rohatyn excused himself to use the bathroom. Siegel thought, "My God, he's human!" There was no reason Siegel couldn't become a legend himself, like Rohatyn.
In April 1976, takeover lawyer Joseph Flom (a founder of Skadden, Arps, Slate, Meagher & Flom) invited Siegel to give a presentation on "identifying takeover targets" at a panel discussion. Siegel was flattered, though he knew it didn't take much to be an expert. Anyone who'd handled even one post-Williams Act deal was considered qualified.
Siegel was even more flattered when he met the other participants: Ira Harris, one of Salomon Brothers's leading investment bankers; Robert Rubin, a fast-rising star at Goldman, Sachs; John Shad, head of E. F. Hutton; Arthur Long, the leading proxy solicitor; Theodore Levine, an enforcement attorney at the SEC; Arthur Fleischer, a prominent takeover lawyer at Fried, Frank, Harris, Shriver & Jacobson; and, seated right next to Siegel, Flom's principal rival in the takeover bar, Martin Lipton, a founder of Wachtell, Lipton, Rosen & Katz.
Collectively, the panel's expertise covered the emerging field of hostile takeovers, a field that was to transform the face of corporate America to a degree that none of them then dreamed possible. American industry had undergone other periods of industrial consolidation, most recently in the sixties, when the fad to diversify had led many large companies into mergers, generally financed with stock during that decade's great bull market. Those acquisitions were mostly friendly. Earlier, the monopolistic corporations of the Morgan era had been produced by numerous mergers (some of them not-so-gently coerced by the great financier himself). None of these kinds of deals were really comparable to the hostile takeover boom that began in the mid-seventies and surged in the eighties, however, except in one key respect: they offered enormous opportunities to profit on the stock market.
Siegel noticed that Lipton was scribbling notes furiously while others made their presentations. Then, when Harris's turn came to speak, Lipton shoved the notes in front of him, and Harris virtually read his presentation. So this was how the M&A "club" worked, Siegel thought.
After Siegel's presentation, Lipton stayed behind to compliment him. After this, the two talked frequently about M&A tactics and exchanged gossip. They made an unlikely pair; the glamorous Siegel and the portly Lipton with his thinning hair and heavy darkframed glasses. But Siegel recognized Lipton's mastery of the field and became an eager student.
Lipton and Flom had developed a new and lucrative retainer arrangement with their clients. Companies who wanted to ensure the firm's availability in the event they became the target of a hostile bid paid the lawyers a substantial retainer fee each year. In the event that they were attacked by another client of either Lipton or Flom, the attacking client agreed in advance to waive any conflict of interest, with the understanding that the lawyers would defend the target company.
Scores of major corporations eventually signed on with Lipton and Flom, even as some established bar members cringed. These lawyers billed strictly by the hour, eschewing even contingency fees. The Lipton and Flora retainers, since they didn't necessarily require work, were more like an insurance policy. The establishment viewed the advance waiver of conflicts with distaste. Yet clients themselves seemed unfazed, a measure of the clout Lipton and Flom could wield.
Siegel began to think Kidder, Peabody should begin to make similar deals. By the time of the panel discussion in 1976, he had become convinced that the merger wave was going to continue, even grow. Bigger rivals, such as Morgan Stanley, Salomon, and First Boston, were already developing reputations for their M&A offensive capabilities. Siegel thought Kidder, Peabody could carve out a niche on the defensive side.
He began to visit potential corporate clients, selling what he called the "Kidder, Peabody tender defense product." He argued that, with only seven days - as provided by the Williams Act - in which to react to a hostile takeover bid, companies had to be prepared in advance with carefully thought-out defensive strategies. This meant retaining Kidder, Peabody - and paying a lucrative retainer like those paid to Lipton and Flom - to ensure preparedness and the firm's availability. Lipton introduced Siegel to leading figures in the close-knit M&A community, and lent his prestige to Siegel's plan.
Siegel's real boost came in May 1977, when Business Week hailed him as the leading takeover defense expert. After describing his success in several large deals, the article also mentioned in passing that he was so good-looking he was considered a "Greta Garbo heartthrob." The article included a photograph, and suddenly Siegel was deluged with requests from women seeking dates. Siegel was amazed that the story, which wasn't given major play in the magazine, conferred such instant status and legitimacy. Kidder, Peabody's copiers went into high gear, sending out copies to prospective clients.
From 1977 on, Siegel called personally on 200 to 300 clients a year. His targets were midsize companies (typically those doing from $100 to $300 million a year in sales) that weren't being adequately serviced by the bigger investment banks. These were the companies most vulnerable to a hostile offer from a larger company. Siegel's product sold. He eventually had 250 corporations paying Kidder, Peabody an annual six-figure retainer.
His main competition came from Goldman, Sachs, the much larger, more powerful firm that had also decided to stake out takeover defense work as its special preserve, albeit for somewhat different reasons. At the time, Goldman had made it a policy to eschew the representation of hostile bidders. With the most enviable roster of large corporate clients on Wall Street, Goldman didn't want to risk alienating them by representing anyone who might be construed as a raider. Traditional investment banking services for these established clients were the bread and butter of its lucrative business.
Siegel loved beating Goldman out of a client. In 1977, Peter Sachs, then head of M&A at Goldman, flew out to the West Coast to meet with Steve Sato, the chairman of Ivac Corporation, a medical equipment manufacturer that had just become the target of a hostile attack by Colgate Palmolive. Sachs, according to the chairman, boasted of the "Goldman prowess." When Siegel went to see Sato, he spent most of the time listening to Sato's goals for the company. The chairman was of Japanese descent. Although Siegel had never eaten raw fish in his life, he joined Sato at his home for sushi. In awarding him the business, Sato told Siegel, "I can't believe that you actually listen. All Goldman told me was how great Goldman is."
Siegel found that his most effective tactic was to let Goldman make its presentation, which typically emphasized that Goldman could get the best price if the target company were sold. Then Siegel would step in. "Hire me," he'd urge. "I'll do my best to keep you independent. I want you as a future client." In fact, most of the companies ended up being sold, given the weak positions of most takeover targets, and Siegel's pitch often couldn't compete with Goldman's size, dominance, and reputation for quality. But Siegel's message frequently convinced the targets' managements that he had their interests at heart - instead of the investment banking fees to be reaped if the company had to be sold.
In 1977, Siegel invented a brilliant but controversial tactic that also endeared him to scores of corporate managers - the go]den parachute. The golden parachute, essentially a lucrative employment contract for top corporate officers, provided exorbitant severance payments for the officers in the event of a takeover. Supposedly, the contracts were intended to deter hostile takeovers by making them more expensive. In practice, they tended to make the officers very rich.
DeNunzio was thrilled by Siegel's success, even though Siegel was working so hard and traveling so much that he rarely saw him. DeNunzio ran Kidder, Peabody in the paternalistic way he had learned from Gordon, usually setting salaries and bonuses singlehandedly. In 1976 Siegel earned over $100,000, then considered a princely sum, especially for someone only 28. In 1977, Siegel was made a director of Kidder, Peabody, the youngest in the firm's history with the exception of A1 Gordon, who had owned the firm.
Soon after, DeNunzio called Siegel into his office. "Marty, you're a bachelor," he said. DeNunzio paused, and Siegel didn't know what was coming. "You've got an Alfa-Romeo convertible and you've got a house on Fire Island. It's too much." What was he getting at? Siegel assumed DeNunzio meant that his style was too racy for some of Kidder, Peabody's clients, or perhaps the other directors, but DeNunzio wasn't more explicit and Siegel couldn't be sure.
"There's a nice house for sale across the street from me in Greenwich," DeNunzio continued. Greenwich was the WASPiest, whitest, most exclusive suburb in Connecticut, a bastion of country clubs and conventional respectability. It was also filled with some of the dullest, most straitlaced people Siegel knew. In addition, he couldn't see living right under DeNunzio's watchful eyes.
But Siegel went out to look at the house. Afterward he got into the offending sports car and drove on Interstate 95 for exactly one-half hour. He found himself in Westport, and called a realtor from a pay phone. He'd been thinking of selling the Fire Island house anyway. The realtor took him to an old house on a small river north of town, and Siegel loved it. He bought it, and spent his weekends fixing the place up.
Siegel told DeNunzio that he was heeding his advice and buying a house in Connecticut. It was in slightly bohemian Westport, not in Greenwich. "A half hour from you is about as close as I can take," Siegel joked.
Later, when he moved to a far more lavish home right on the coast, Siegel sold the Westport house to CBS News anchor Dan Rather.
One day, not long after he had bought the house in Connecticut, Siegel's secretary told him he had a call from an Ivan Boesky. He knew Boesky only as another arbitrageur, one of the many who were calling him now that he was developing a reputation in the M&A crowd. But Siegel also knew that Boesky was a trading client of Kidder, Peabody. He took his call.
Siegel was impressed with Boesky's market acumen, his knowledge of takeover tactics and stock accumulation strategies. They became friends though they didn't actually meet for some time. In the peculiar world of Wall Street, close friendships can develop entirely on the telephone. Gradually Siegel began to see Boesky as someone he could discuss strategy with, bounce ideas off of, gossip with. He needed this information since he had no Kidder, Peabody arbitrageur to turn to. The firm had traditionally shunned arbitrage, and had no department. DeNunzio and Gordon believed arbitrageurs were unsavory, tried to get inside information, and gave rise to conflicts of interest within the firm.
Yet arbitrageurs like Boesky were becoming increasingly important to any investment banker involved in M&A. Historically arbitrageurs had traded to take advantage of price discrepancies on different markets, such as London and New York. It was conservative, nearly risk-free trading yielding small profits. But they had become progressively more daring, first buying heavily stocks that were the subjects of announced takeover bids, betting the deals would go through; eventually they started buying stocks they only suspected would be the targets of takeover bids. When they guessed right, the profits were huge.
Evaluating the effects of these massive purchases of rumored or real takeover stocks had become a crucial part of Siegel's job. Arbitrageurs were also fonts of information, from clues to the other side's tactics, to rumors of impending bids that could be used to attract defense clients.
Arbitrageurs tended to be crass, excitable, street-smart, aggressive, and driven almost solely by the pursuit of quick profits. Their days were defined by the high-pressure periods between the opening and closing bells of the stock exchange, during which they screamed orders into phones, punched stock symbols into their electronic terminals, scanned elaborate screens of constantly shifting data, and placed phone calls to every potential source of information they could imagine. After work, they tended to blow off steam by carousing in bars like Harry's, just across Hanover Square from Kidder, Peabody, or, if they'd had a good day, in expensive Manhattan restaurants.
One day in 1979, Siegel confided to Boesky that he'd fallen in love. The affair was threatening to become a minor scandal at Kidder, Peabody.
In the late seventies, the first wave of women business school graduates reached Wall Street's shores. Jane Day Stuart turned heads at Kidder, Peabody on the day she first swept through the corporate finance offices. A Columbia Business School graduate, she was smart, blonde, thin, personable, stylish, and married.
Kidder, Peabody had long maintained an unspoken policy against office affairs. A fling with a summer employee had damaged another investment banker's career. But in late 1978, Stuart and her husband were divorced. Shortly after, Siegel and Stuart played tennis. By August 1979, they were living together. When colleagues tried to warn Siegel, he brushed them aside, saying he wasn't interested in firm politics and didn't care whether he ever ran the firm.
When Henry Keller, head of corporate finance, learned of the affair, he went to DeNunzio, prompting speculation that DeNunzio would bring the relationship to an abrupt halt. DeNunzio did nothing. Unknown to many, DeNunzio's son, David, was also having an affair at the firm. DeNunzio's tolerance was interpreted as a sign of the times and a measure of Siegel's clout. DeNunzio also seemed relieved that Siegel's bachelor days appeared to be numbered.
Some of Stuart's friends and relatives in Baltimore warned her against marriage to someone Jewish, even someone as nonreligious as Siegel. But she was headstrong and in love, even though some of her male colleagues speculated unkindly that she was using her business acumen to trade up the marriage ladder. She and Siegel were quietly married in May 1981 and began drawing up plans for a new, larger house in Westport.
Soon after their marriage, Boesky called to invite Siegel and Jane Day to his house in Westchester County for dinner. It was Boesky's first social invitation to the Siegels, a small dinner for three couples: Boesky and his wife Seema; financier Theodore Forstmann, who numbered Boesky among the investors in his partnership, and his date; and the Siegels. Siegel decided to bring along a copy of his house plans to show the Boeskys.
Following Boesky's directions, the Siegels drove north from Manhattan for about 45 minutes, through the exclusive towns of Bedford and Mount Kisco. The area is one of large estates, wooded rolling hills, and some pre-Revolutionary houses. Few of the large houses are visible from public roads, and the Boesky house is set so far back in its 200 acres of property that visitors sometimes got lost winding through the maze of driveways and service roads leading from the entrance gates.
The Siegels pulled into the drive between large pillars and a gatehouse and stopped as a security guard parked in a pickup truck waved them to a halt. Siegel went over to the guard, introduced himself, and was cleared for entry - but not before he was startled to see the blue-black steel of a large pistol in a holster strapped to the guard...
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| View all 10 comments |
The New York Times (MSL quote), USA
<2006-12-25 00:00>
Absolutely Splendid... Tremendously Important... Indecently Readable. |
USA Today (MSL quote), USA
<2006-12-25 00:00>
A fast-paced adventure populated with people who could teach the characters in 'Dallas' and 'Dynasty' a thing or two... It is a must read for anyone trying to make sense of the greed decade. |
The Washington Post (MSL quote), USA
<2006-12-25 00:00>
Bursting with details... but told with magical clarity. |
The Philadelphia Inquirer (MSL quote), USA
<2006-12-25 00:00>
Stewart takes the reader through the maze of arcane Wall Street dealings as if he were writing a detective story. |
View all 10 comments |
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