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Den of Thieves [Paperback]

James B. Stewart
4.3 out of 5 stars  See all reviews (135 customer reviews)

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Editorial Reviews

From Publishers Weekly

This 29-week PW bestseller, a QPB main selection, tells of the rise and fall during the 1980s of the biggest insider trading ring in Wall Street history. Updated in paperback. Photos.
Copyright 1992 Reed Business Information, Inc.

From Library Journal

Michael Milken, Ivan Boesky, Martin Siegel, and Dennis Levine will long be remembered for the Wall Street insider trading scandals of the 1980s. Stewart, a Pulitzer Prize-winning Wall Street Jour nal reporter who covered the various scandals, has used his reportage as well as an exhaustive culling of court documents, testimony, and interviews with all of the participants to fashion an authoritative account of what happened. Stewart has done a thorough job in assembling the facts and has made connections that may surprise some readers. For example, Milken, the Drexel Burnham Lambert junk bond king who convinced many savings institutions and insurance companies to buy these bonds in large quantities, may have indirectly contributed not only to the bailout of various thrifts but also to the insolvency of some insurance companies. While this is a well-researched and highly readable work, there is such an abundance of financial details that a glossary of terms and related Wall Street jargon would have been helpful. This minor caveat aside, Stewart's contemporary morality tale is recommended for all business collections in public, special, and academic libraries. (Index not seen.) Previewed in Prepub Alert, LJ 5/15/91.
- Richard Drezen, Merrill Lynch Lib. , New York
Copyright 1991 Reed Business Information, Inc. --This text refers to an out of print or unavailable edition of this title.

From Kirkus Reviews

A damningly detailed rundown on 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. Wall Street Journal editor Stewart (The Partners, The Prosecutors) was a beat reporter for much of the dirty decade. As one result, he has firsthand knowledge of the carriage-trade criminals who made a mockery of free enterprise during one of the century's greatest bull markets. Focusing on four major culprits- -Ivan Boesky, Dennis Levine, Michael Milken, and Martin Siegel--the Pulitzer-winning reporter offers unsparing accounts of the havoc they wreaked on their own as well as in concert with wide-ranging rings of accomplices. Nor, it seems, was the performance of the SEC and US Justice Department particularly praiseworthy. Indeed, the author leaves little doubt that regulatory authorities and enforcement officials were usually overmatched and outmaneuvered. Stewart nonetheless devotes most of his attention to the villains of the piece, who participated in and organized the era's antisocial daisy chains. Levine, for example, latched on to Boesky, who, in need of inside information to reduce the risk of his high- stakes arbitrage trading, had lured investment banker Siegel into the game. In turn, Boesky became a pawn of Milken's, a control freak whose financial acumen was exceeded only by his talent for plotting and organizing illicit buy/sell networks. The author puts paid to any lingering notion the junk-bond king was unjustly hounded by vengeful agents of the federal government. In addition, he makes clear that, but for stubborn pride and hubris, the man who leveraged corporate American could have cut a favorable deal that greatly reduced his ten-year prison sentence. A sorry and cautionary tale of world-class scofflaws, brilliantly reported by a savvy journalist with a sure sense of right and wrong. -- Copyright ©1991, Kirkus Associates, LP. All rights reserved. --This text refers to an out of print or unavailable edition of this title.

Review

Absolutely Splendid...Tremendously Important...Indecently Readable. (Michael Thomas The New York Times)

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. (USA Today)

A revealing, disturbing tale of what can happen when greed runs rampant. (The Seattle Times)

Bursting with details...but told with magical clarity. (The Washington Post)

Stewart takes the reader through the maze of arcane Wall Street dealings as if he were writing a detective story. (The Philadelphia Inquirer)

About the Author

James B. Stewart is the author of Heart of a Soldier, the bestselling Blind Eye and Blood Sport, and the blockbuster Den of Thieves. A former Page-One editor at The Wall Street Journal, Stewart won a Pulitzer Prize in 1988 for his reporting on the stock market crash and insider trading. He is a regular contributor to SmartMoney and The New Yorker. He lives in New York.

Excerpt. © Reprinted by permission. All rights reserved.

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 ...

From AudioFile

Corporate greed, insider trading, fraud, inflated egos, political intrigue, Milken, Boesky, Giuliani. Ah, the '80s! What will early 21st-century business leaders do to top the escapades of their forebears? Let's hope we don't find out. This exhaustively researched story is at once appalling and fascinating, and narrator Johnny Heller keeps the story moving. His voice is the embodiment of 1980s style: brash, freewheeling, uneven, and compelling. But he reads too fast at times, and it's obvious on the tapes where he had to go back and rerecord. He also makes notable pronunciation mistakes. Despite all that, his pacing is brisk and entertaining. R.I.G. © AudioFile 2004, Portland, Maine-- Copyright © AudioFile, Portland, Maine --This text refers to the Audio Cassette edition.
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