The Wall Street Scheme – 8/24/1982

US History |

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On August 24th of 1982, Martin Siegel, a graduate of Harvard Business School and a mergers and acquisitions executive at Kidder, Peabody & Company, walked into the Harvard Club in New York. While there, he met a colleague, Ivan Boesky. Siegel lamented to Boesky of his so-called financial troubles. Obviously, a man with a degree from Harvard who holds a white collar job need not have financial troubles, but Siegel apparently did, or thought he did. Boesky offered Siegel a job, which Siegel declined, stating his preference for a “consulting” position. Boesky wondered (aloud) if Martin Siegel could provide him with insider information about stocks on the New York Stock Exchange. In that moment, a Wall Street scheme was hatched. 

Nobody else heard the above conversation. More than four months passed without incident. Suspiciously, in January of 1983, Boesky sent a courier with a briefcase containing $150,000 in 100-dollar bills to Siegel at the Plaza Hotel. Over the next two or three years, Siegel passed insider information to Boesky. Boesky made 28 million dollars investing in carnation stock before the company got taken over, as Boesky had known it would, based on Siegel's insider tips. However, Boesky's unfailing success in the stock market aroused suspicion among investigators, which included both the press and the Securities and Exchange Commission. Rumors were rampant that Siegel and his company were involved in illegal dealings on Wall Street.

Despite the fact that things were heating up, Siegel and Boesky met at a deli in January of 1985. There, Siegel demanded $400,000, and arranged to have the cash dropped off at a particular phone booth. Siegel waited at the phone booth. After receiving the money, Martin Siegel ended his relationship with Ivan Boesky, but continued to offer insider information to other Chief Executive Officers (CEOs) on Wall Street.

There is a lot of money being thrown around on the Wall Street stock exchange. Where there is seemingly unlimited money, there is seemingly unlimited greed. The two go hand in hand. Some Wall Street CEOs could just not resist being greedy, despite the handsome salaries they were already earning, and despite the risk of spending many years in prison. 

The illegal stock market schemes were busted wide open in 1986, with many important names on Wall Street being arrested, including Michael Milken (the junk bond scammer) and Ivan Boesky. Milken was hit with a ten year sentence and Boesky got three years. On February 13th of 1987, Siegel pleaded guilty to one count of conspiracy to violate the securities laws, and one count of tax evasion. Siegel, who made some show of remorse, was also required to pay more than nine million dollars in civil penalties. He eventually received a sentence of two months in prison and five years’ probation. The light sentence was a result of his complete cooperation with government investigations.

The criminal activities of Martin Siegel are described in a book called Den of Thieves, by Pulitzer Prize winning author James B. Stewart. 

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Nancy Reyes

Senior Writer

One of our top senior writers, Nancy came to us wanting to break away from the politics that comes with major news corporations. She leads our team of historical writers in creating the best engaging content out there that keeps our readers coming back for more. She is an enthusiast of all things medieval and has been a member of her renaissance fair group for 15 years. She received her degree in International Relations from the University of Southern California and hopes to one day travel the world.