With all the scandal tarnishing the financial system I have always wondered if there is an inherently corrupting force in anything which can lavishly reward the most extreme personal greed or if it is a question of the regulators catching up with the financiers. In his account of the Milken and Boesky insider trading scandal that bookmarked the 80s, Stewart gives credence to both.

Stewart painstakingly lays out the principal actors, the actions they took, sins committed and what the consequences were of the junk bond scandal. In his hands this is actually pretty riveting stuff and best of all is the access you get into the mind sets of those who committed these crimes. What I found most striking was the arrogance of the principals, the steadfast self justification - not only would they refute any wrongdoing in their minds they were heroes, and finally how the criminal behaviour was so richly rewarded even post persecution.

A shocking expose of the insider-trading and junk-bond scandal in Wall Street during the Eighties. The conclusion one draws is Human Greed is insatiable and is the cause of misery to many bystanders who become the victims of the avarice of a few. Also illuminating is the hard work and dedication of lowly paid government investors. Well presented and an excellent read.

Big financial crime and the arrogant a**holes who almost got away with it. Very well written.

The pros of the book:
1) First 60%-75% of the book is easy to listen to and immersive. You get to know the people involved and their histories with each other. It pretty much involves four parallel story lines: Marty Siegel, Dennis Levine, Ivan Boevsky, and Michael Milken, with Ivan being the common person among all of them. Towards the end, the Seigel, Levine, and Boesvsky plots are essentially wrapped up, and they are replaced with the US government and Drexel, Burnham (led by Joseph) characters/plots. There are definitely some important sub-plots and other people involved and discussed in the book, but that is the way I categorized the book while I was listening.

2) I'll list this under cons too, but an aspect that makes the book so immersive at first is that the author will say what the person was thinking at the time of action, and this is true for pretty much every major character.

3) While the first chapter and the last chapter are preachy as to a) what you will be reading about is very wrong and bad, and b) what you just read about was very wrong and bad, the book stays away from moralizing in everything in between. It lets the characters, through expressing their inner thoughts, say whether something felt right or wrong at the time.

4) As other reviewers have written, this book seems aimed at being a history book for the junk bond era of the 1980s. I take that as a good thing and something to be commended.

Cons
1) Once the bargaining phase between the government and the various institutions and characters begins re: criminal charges or SEC complaints, the book loses its steam. It probably very accurately recounts the many, many back and forths of negotiation, but it started to become very tedious.

2) Too often the author references someone's inner thoughts to the point where I started to ask: "how does the author know this? can I really believe what I'm listening to?" Since this is a work of non-fiction, I thought the author should have used the inner thought process less often than he did.

As with all stories about high-flying 80s Wall Street players, Den of Thieves inspired in me that peculiar mix of disgust and envy - disgust for the unethical behavior and blatant criminality that these guys thought they could get away with, and envy for the amazing lifestyles and sheer balls they had. One of the main characters has a resume created for himself with a hilariously straightforward summary: "Dennis describes himself as a person who truly loves to do two things: do deals and make money". What happens when that kind of personality is unleashed upon the junk bond market in the Reagan 80s? A lot of money is made for some, a lot of money is lost for others, and a very interesting story of finance, ethics, and the law unfolds.

I was already a fan of Stewart's from Disneywar, his superb history of the Disney Renaissance under Michael Eisner. This earlier work features his same close attention to detail and skill for narrative applied to the inherently complicated world of bond trading and corporate finance instead of the entertainment industry. One of the main reasons that Wall Street criminals are able to get away with so much is that their crimes are grounded in arcane mathematical formulas that most laymen won't bother to put in the time to understand. That's good news for them, because once you get beyond the forbidding barriers of the mechanics of risk-adjusted returns and yield curves, their day-to-day activities are actually fascinating, all the more so because their actions have vast ramifications for the economy as a whole. With the right kinds of deals, they can make or break whole companies, either allowing small companies to become powerful behemoths or destroying smaller businesses with complex debt schemes.

No one understood those debt schemes better than Michael Milken. Even to this day he's a legend for having created basically the entire market for junk bonds by himself, but the more Stewart talks about his maniacal work habits and his overpowering passion for his deals, the more you almost begin to think that his epic paydays (he once made $550 million in the single year of 1987) were deserved. Less worthy were his arbitrageur counterparts Dennis Levine and Marty Siegel, or his partner Ivan Boesky, who ended up inspiring much of the Gordon Gekko character in the movie Wall Street.

For the most part, they come off as barely competent (Levine in particular seems to have been incapable of actually performing any arbitrage, handing off much of the grunt work of making his numbers add up to assistants and making all his money off of insider trading), and while Stewart casts a sympathetic light on Siegel, it's hard to look at what these guys did and not feel more contempt than pity, especially given the utterly stupid things they and their associates did to get caught (pro tip: do not brag about having $5.3 million in off-books transactions to law enforcement officials). Stewart makes their activities as clear as possible, explaining how the seemingly benign sweetheart deals the bankers arranged for each other fit into their larger plans. Movies like Other People's Money could have been directly based on events like their leveraged buyouts of businesses such as Ntional Can Company.

One feature of the book I really appreciated was that it spent a great deal of time discussing the prosecutorial strategies of the SEC and the US attorney's office, then headed by a pre-mayoral Rudy Giuliani. Descriptions of of subpoenas, admissibility of evidence, and immunity agreements might not seem very interesting, but Stewart is good at shining a light on why prosecutions take so long. The difficulty of constructing clear evidence trails, the sheer complexity of the cases, and simple turf wars between enforcement agencies mean that what seem like open-and-shut cases of large-scale theft and fraud can drag on for years; this has obvious implications for the light sentences enjoyed by the malefactors of the 2008 financial crisis. It often seems like the only real crime is failure, so except for the fact that these bad deals meant ruined companies, it's funny and schadenfreude-inspiring to read statistics like the following:

"During the decade ending in 1990, Lipper Analytical Services reported, money invested in the average junk-bond fund grew 145%. That was, in fact, worse than the same amount of money invested in stocks (207%); investment-grade corporate bonds, so often ridiculed by Milken (202%); US treasury bonds (177%); and equal to returns from low-risk money market funds. During the decade's last years, junk bonds returned a negative 11.2%."

Stewart's typically well-sourced and and well-researched profiles ensure that now-obscure companies like Drexel Burnham Lambert are remembered for their crimes; and he's mercifully free of the awed tones of a Michael Lewis, even if he seems almost too willing to make characters like Siegel look good. Some of his reconstructed conversations seem too pat, but that's almost inevitable. However, as a glimpse into the frenetic yet occult world of leveraged buyouts, it's riveting. Seeing these multi-multi-millionaires weep hot tears as they get tagged with multiple felony counts is a true delight and would make the book worth it on that count alone, but Stewart's aims are much higher, and much more valuable.

2.5 rounded. This isn't a subject that fascinates me much. And, honestly, a lot of the book was hard for me to understand, because I don't understand the ins and outs of Wall Street. My father-in-law, though, does enjoy the stock market stuff, and he thought I might be interested.

I will say I DID learn stuff from reading this. It was lengthy and very, very descriptive, so it took me over 6 months to read it. But I have a better understanding of "junk bonds" (and a new appreciation for their part in the movie THE WEDDING SINGER) and why there are a lot of laws pertaining to the stock exchange. My biggest take-aways:

Greed is bad
Greed shares a bed with a host of other immoral behaviors
If you are willing to cheat and lie to get rich, you'll never be rich enough to be satisfied
I think I prefer being an average person who isn't rich.

Might do bigger numbers then Wolf of Wallstreet if it where a movie.


What my

The first half of the book, when Stewart is detailing the crimes and the grift and the greed, all I wanted to do was throw the book against the wall. I realized that greed and grift are really two things that deeply anger me, and I was glad there was some justice, but I still felt most of the players got off too light. And I hate that Michael Milken is still ridiculously rich and that he only had to serve 2 years of his 10 year term, and his later term career as a philanthropist doesn't make me any more inclined to think highly of him - it just makes me think that the philanthropy world is equally corrupt (which it is). https://en.wikipedia.org/wiki/Michael...

And if there was another reason to hate Trump (as if I needed another), he also fully pardoned Milken in 2020. From one grifter to another, it's appropriate but still disgusting.

THE DEFINITIVE ACCOUNT OF THE INSIDER-TRADING SCANDALS OF THE 1980s,

James Bennett Stewart (born 1952) is an American lawyer, journalist, and author, who won the Pulitzer Prize for Explanatory Journalism in 1988.

He wrote in the Prologue to this 1991 book, "This is the full story of the criminals who came to dominate Wall Street, how they achieved the pinnacle of wealth, power, and celebrity, and how they were detached and brought to justice... this story shows how the nation's financial markets were in fact corrupted from within, and subverted for criminal purpose."

One participant thought, "It all seemed so easy... It was true, he rationalized, that everyone on Wall Street seemed to be turning confidential information to their advantage. What was the real harm?" (Pg. 78) Ivan Boesky famously/infamously made a commencement speech at which he proclaimed, "Greed is all right... greed is healthy. You can be greedy and still feel good about yourself." (Pg. 261) He notes that Michael Milken's 'genius' seemed his ability to make so many believe his gospel of high return at low risk." (Pg. 504)

After the crash/arrests, "Wall Street was littered with victims. To a profound degree, the mood changed overnight. People no longer made as much money, and they didn't expect to again. It wasn't as much fun to come to work." (Pg. 419)

While there have been more recent accounts, this book remains a stellar example of reporting, and is well worth reading.

I recently finished reading Den Of Thieves - by Pulitzer Price Winner, James B. Stewart.

Below are key excerpts from the book that I found to be particularly insightful:

Even now it is hard to grasp the magnitude and the scope of the crime that unfolded, beginning in the mid-1970s, in the nation's markets and financial institutions. It dwarfs any comparable financial crime, from the Great Train Robbery to the stock-manipulation schemes that gave rise to the nation's securities laws in the first place. The magnitude of the illegal gains was so large as to be incomprehensible to most laymen.

Nor were these isolated incidents. Only in its scale and potential impact did the Milken-led conspiracy dwarf others. Financial crime was commonplace on Wall Street in the eighties. A common refrain among nearly every defendant charged in the scandal was that it was unfair to single out one individual for prosecution when so many others were guilty of the same offenses, yet weren't charged. The code of silence that allowed crime to take root and flourish on Wall Street, even within some of the richest and most respected institutions, continues to protect many of the guilty. To dwell on the ill-gotten gains of individuals, however, is to risk missing the big picture. During this crime wave, the ownership of entire corporations changed hands, often forcibly, at a clip never before witnessed. Household names—Carnation, Beatrice, General Foods, Diamond Shamrock—vanished in takeovers that spawned criminal activity and violations of the securities laws.

Nor should the financial implications of these crimes, massive though they are, obscure the challenge they posed to the nation's law-enforcement capabilities, its judicial system, and ultimately, to the sense of justice and fair play that is a foundation of civilized society. If ever there were people who believed themselves to be so rich and powerful as to be above the law. They were to be found in and around Wall Street in the mid-eighties. If money could buy justice in America, Milken and Drexel were prepared to spend it, and spend it they did. They hired the most expensive, sophisticated, and powerful lawyers and public-relations advisors, and they succeeded to a frightening degree at turning the public debate into a trial of government lawyers and prosecutors rather than of those accused of crimes. But they failed, thanks to the sometimes heroic efforts of underpaid, overworked government lawyers who devoted much of their careers to uncovering the scandal, especially Charles Carberry and Bruce Baird, in the Manhattan U.S. attorney's office, and Gary Lynch, the head of enforcement at the Securities and Exchange Lynch, the head of enforcement at the securities and exchange ness of crime on Wall Street after a decade of lax enforcement sometimes overwhelmed their resources. Not everyone who should have been prosecuted has been, and mistakes were made. Yet their overriding success in prosecuting the major culprits and reinvigorating the securities laws is a tribute to the American system of justice.

For Levine, the experience only reinforced his view that without extraordinary measures, he was never going to realize his grand ambitions. Not that he was particular surprised. As he told Wilkis constantly, he was convinced that everyone was using inside information to get ahead: the game was rigged.

The causes of the boom were probably as much psychological as financial, though many economic explanations have been offered to explain the sudden, almost frenzied effort to buy existing companies rather than create new ones. Throughout the 1970s, investors had focused on company earnings, and the corresponding price/ earnings ratios, as a measure of value. With an economy ravaged by post-Vietnam War and OPEC-induced inflation, high tax rates, and soaring interest rates, profits had been meager. So stock prices Stayed low even as inflation pushed the value of income-producing assets ever higher. Coupled with low-priced assets was the tax code's very generous treatment of interest payments on debt. Corporate dividends paid on stock aren't deductible; interest payments on debt are fully deductible. Buying assets with borrowed funds meant shifting much of the cost to the federal government. The election of Ronald Reagan in 1980 sent a powerful "anything goes" message to the financial markets. One of the first official acts of the Reagan Justice Department was to drop the government's massive ten-year antitrust case against IBM. Bigness apparently wasn't going to be a problem in the new era of unbridled capitalism. Suddenly, economies of scale could be realized in already oligopolistic industries such as oil, where mergers wouldn't even have been considered in the Carter years.

Yet history offers little comfort. The famed English jurist Sir Edward Coke wrote as early as 1602 that "fraud and deceit abound in these days more than in former times." Wall Street has shown itself peculiarly susceptible to the notion, refined by Milken and Boesky and their allies, that reward need not be accompanied by risk. Perhaps no one will ever again dominate the financial world like Milken with his junk bonds. But surely a pied piper will emerge in some other sector. Over time, the financial markets have shown remarkable e resilience and an ability to curb their own excesses. Yet they are surprisingly vulnerable to corruption from within. If nothing else, the scandals of the 1980s underscore the importance and wisdom of the securities laws and their vigorous enforcement. The Wall Street criminals were consummate evaluators of risk—and the equation as they saw it suggested little likelihood of getting caught.

A highly recommended read in the area of finance.

For those that remember the high-flying days of the 1980's Wall Street, or even remember the fictional Gordon Gecko of the 1987 MOVIE "Wall Street", this is a definite read.

In fact, Gordon Gecko was inspired BY the real-life characters of this book: Michael Milken and Ivan Boesky. Boesky even spoke at Berkeley in 1986 talking about greed, saying, "I think greed is healthy. You can be greedy and still feel good about yourself". This statement became the impetus of the memorable Gordon Gecko speech in the movie.

James Stewart, a former front-page editor for the Wall Street Journal, does a masterful job explaining to the lay person the convoluted dealings of Wall Street after the Reagan-backed deregulation of the banking industry. He gives you a great sense of the culture and lack of true oversight that led to what was at the time, the biggest Wall Street scandal since the '29 crash.

All this seems to pale in comparison to the sub-prime fiasco in the 90's and 2000's, but is certainly a precursor to that greater scandal. The culture explained here led directly to the later and greater problems to come.

I would suggest that you read this, then move right on to books like "The Great Short" on the sub-prime mortgage story.

Wish I'd read this book a decade ago...