Junk-Bond King Michael Milken Wins Redemption With Trump Pardon
David Bahnsen, who manages more than $2 billion, was enjoying a lunch of Dover sole at Michael’s in Midtown Manhattan on Tuesday when he got the news.
A text from a friend in Donald Trump’s administration told him the president was pardoning Michael Milken almost exactly 30 years after the junk-bond king pleaded guilty to securities fraud.
Bahnsen shared the news with his lunch date, high-fived him, explained what was happening to the Wall Street figure at the next table, and slapped his palm, too.
“There isn’t anybody in finance who doesn’t believe that this is the right thing to do,” the executive, who runs wealth management firm Bahnsen Group, said in a phone call. “It was always inevitable.”
Bahnsen is a member of a club of well-connected executives, powerful investors and multibillionaires who wanted the White House to take mercy on Milken.
Supporters include casino magnate Sheldon Adelson, Apollo Global Management Inc. co-founder Josh Harris, Vornado Realty Trust boss Steven Roth and Carlyle Group Inc.’s David Rubenstein, according to a White House announcement that also cited Bahnsen. He wrote a plea to Trump in 2017 that chalked up Milken’s conviction to “a period of class envy run amok.”
Milken’s rise behind an X-shaped desk in Beverly Hills was so sharp that it fueled the buyout boom and the reign of junk bonds, though his colleagues inside Drexel Burnham Lambert preferred the term high yield. His fall, culminating in 22 months in prison for illegal trades, was so steep that it helped turn him into a symbol for the avarice of an entire industry and era.
Renegades of junk: The rise and fall of Drexel
The 73-year-old billionaire’s rescue by Trump was so astounding that Wall Street observers wondered if he would try to return to the securities industry that banned him for life.
“Today, that is the farthest thing from his mind,” a spokesman for Milken wrote in an email. “He’s fully dedicated to continuing his lifelong crusade to cure cancer and other life-threatening diseases.” Another statement added that Milken was “very grateful to the president.”
Around the time that Trump was trying to transform himself into a king of 1980s New York real estate, Milken was helping to turn junk bonds from a backwater of risky corporate debt into a trillion-dollar market. Those bonds let a ragtag group of corporate raiders borrow enough to take over some of America’s best-known companies, and Milken inspired Wall Street acolytes who stayed loyal well past Drexel’s bankruptcy — and his tearful apology in court for securities fraud.
White House Press Secretary Stephanie Grisham said the conviction was based on “truly novel” charges.
Milken embraced the spotlight after prison, recasting himself as a philanthropist trying to cure cancer and help children. Some of his projects have included the Milken Family Foundation, Milken Educator Awards, Milken Archive of Jewish Music, Milken Community Schools, Milken Scholars program and the Milken Institute, whose annual conference brings together the world’s most powerful finance figures for mingling, yoga, talk of the future and playtime with puppies.
The Beverly Hills gathering is a contemporary version of what was known decades ago as the Predators’ Ball, famous for its cigar smoke, testosterone and talk of takeovers.
In 1998, Milken agreed to pay $47 million to settle Securities and Exchange Commission claims he had violated his ban from the industry, without admitting or denying wrongdoing.
Fifteen years later, regulators investigated whether he had committed another violation by working with Guggenheim Partners. The firm agreed to pay $20 million to settle SEC charges that it failed to disclose a $50 million loan by a client to one of its senior executives. Milken was the client, people familiar with the matter have said.
His fans across Wall Street and big business stayed loyal, and he even gained new ones.
Trump’s announcement cited Rupert Murdoch, former Facebook Inc. President Sean Parker, Nelson Peltz and hedge fund manager John Paulson. Milken also had backing inside the administration from Treasury Secretary Steven Mnuchin, Trump son-in-law Jared Kushner and Rudy Giuliani, who as federal prosecutor helped send Milken to prison.
A few days ago, Bahnsen bumped into Giuliani. “I guess he must not have known,” the executive said. “He didn’t let on at all.”
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