Michael Milken

Michael Milken is an American financier who helped develop the market for high-yield bonds and pleaded guilty to securities offenses in 1990.

High-yield debt: Corporate debt rated below investment grade, carrying higher interest rates to compensate for greater default risk. Milken helped build the market that made this financing a major Wall Street business.
Wharton School: The business school of the University of Pennsylvania, where Michael Milken studied finance. Milken’s academic training preceded his research on high-yield bonds.
Ivan Boesky: An American arbitrageur who pleaded guilty to securities fraud in 1986 and cooperated with federal investigators. Boesky’s cooperation helped bring investigators to Milken and Drexel.
United States v. Michael Milken: The federal criminal case in which Michael Milken pleaded guilty to six securities and reporting violations in 1990. The case ended his tenure at Drexel and brought a prison sentence and financial penalties.
Financial innovation: The creation or adaptation of financial instruments, institutions, or practices. Milken’s defenders point to high-yield bonds as an innovation that widened access to capital.
Junk bond: A colloquial name for a bond rated below investment grade and therefore offering comparatively high yields. The label became closely associated with the bond market Milken developed.
University of Pennsylvania: A private research university in Philadelphia, founded in 1740. Milken studied there before entering investment banking.
Rudolph Giuliani: An American prosecutor and politician who led major federal securities-fraud investigations as U.S. attorney for the Southern District of New York. His office pursued the case against Milken and Drexel.
Insider trading: Trading securities while possessing material, nonpublic information in violation of securities law. Milken’s prosecution arose amid a major federal campaign against Wall Street securities offenses.
Corporate raider: An investor who seeks control of companies, often through acquisitions opposed by their management. Milken’s financing helped enable takeovers that critics associated with corporate raiding.

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