Boyd L. Jefferies, founder of the innovative Los Angeles brokerage firm that became a major force in corporate takeovers, pleaded guilty today to two securities law felonies.
Jefferies waived indictment and pleaded guilty to aiding and abetting a company controlled by stock speculator Ivan F. Boesky to keep false books and records. He also pleaded guilty before U.S. District Judge Morris E. Lasker to violating federal securities law margin rules governing brokerage firms as part of a market manipulation scheme.
In accepting the guilty plea, Lasker advised the gray-haired, tanned Jefferies that he faces a maximum sentence of 10 years in prison and $500,000 in fines.
Boesky is at the center of Wall Street's biggest insider-trading scandal. He has settled a $100-million Securities and Exchange Commission civil action without admitting guilt and agreed to plead guilty to an unspecified felony count.
Jefferies was released on his own recognizance and sentencing was scheduled for June 5.
Jefferies, 56, resigned as chairman of Jefferies Group Inc. on March 19, the same day federal prosecutors announced he had agreed to plead guilty to two felony counts.
The same day, Jefferies settled--without admitting or denying guilt--an SEC civil action that charged he engaged in multiple violations of securities laws.
The charges included participating in a stock market manipulation scheme and a separate stock "parking" scheme with Boesky.
Parking stock is the process of buying stock for someone else who doesn't want to be identified as the owner. The SEC charged that Jefferies helped cover up Boesky's identity and that in some cases, Boesky did the same for Jefferies.
As part of his settlement, Jefferies was barred from the securities industry for at least five years and placed his personal stake in Jefferies Group in a voting trust.
Jefferies, who founded the brokerage holding company 25 years ago, was known in the industry as a hard-driving pioneer in the so-called "third market," where listed stocks are traded without going through an exchange. Last year Jefferies Group accounted for about 3% of the securities listed on the New York Stock Exchange.
Earlier today in Lasky's court, three top Wall Street executives pleaded not guilty to an alleged insider trading conspiracy.
Robert M. Freeman, a partner and head of arbitrage at Goldman, Sachs & Co.; Richard B. Wigton, the suspended head of arbitrage and over-the-counter trading at Kidder, Peabody & Co., and Timothy L. Tabor, a former arbitrager at Kidder Peabody, remained free on bond.
They were indicted last Thursday on charges of conspiracy and securities fraud.
If convicted of all charges in the four-count indictment, each faces a maximum penalty of 20 years in prison and fines of $250,000, or twice any illegal profit, whichever is greater.