Wall Street scandal
The end of "greed is good"
Good morning, intrepid traders. This is your Stock Market Rundown for May 31st, 2024. Thanks for joining me. Let’s dig in:
TODAY’S TOP STORY: 1980s TRADING TAKEDOWN
Ivan Boesky became one of the wealthiest and best-known financiers of the 1980s thanks to his audacious merger arbitrage bets. Fortune called him a “money machine”. And the character of Gordon Gekko in Wall Street was partly based on him.
But Boesky, who died last week at 87, didn’t get his trading profits from his famous 20-hour workdays. He got them via inside information from his investment-banking buddies, in exchange for suitcases of cash.
Boesky started up his own stock brokerage in the mid-70s, funded by his wife’s family money. A decade later, he’d built a personal fortune of more than $200 million. He ferried between Manhattan and his homes in Palm Beach and the south of France.
But the SEC was circling. They figured out Boesky was getting illegal tips about mergers and other transactions. His bets weren’t bets at all—they were sure things. Soon the feds had enough to charge him with conspiracy.
Boesky didn’t go down alone. Cooperating with the government in exchange for leniency, he wore a wire and secretly taped conversations with other Wall Streeters, leading to a host of convictions. In the end, Boesky did two years in “Club Fed”, paid a $100 million fine, and was barred from the securities industry for life.
The insider trading scandals of the 1980s enraged the public by revealing that the dice were loaded, and Wall Street was flagrantly disregarding the rules. The consequences? A push for more oversight and accountability—and an end to suitcases of cash trading hands between guys in Brooks Brothers suits.
SO WHAT ELSE IS GOING ON?
No matter what your tax bracket, everybody loves a deal. TJ Maxx raised its annual profit forecast as wealthy shoppers traded down to cheaper retailers.
GM CEO Mary Barra thinks autonomous driving is the answer to preventing road accidents. Makes sense: an autonomous vehicle never has to worry about driving while tired, drunk, or distracted by an Instagram notification.
Workday, which makes HR software, cut its annual revenue forecast as corporations pared back hiring. HR software sounds great until an AI bot is giving you a fireside chat for sharing an inappropriate meme in Slack.
Burger King is launching a $5 value meal to attract cost-conscious customers. This better not be six french fries and a burger that looks like a beer coaster.
That’s it for the week, besties. Touch grass this weekend, and I look forward to seeing you first thing Monday. Yours in capitalism, The Axe
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