DREXEL CHRONOLOGY
Here is a chronology of major developments in the recent history of Drexel Burnham Lambert Inc.:
May 12, 1986--The Securities and Exchange Commission charges Dennis B. Levine of Drexel Burnham Lambert Inc. with making $12.6 million in profits from illegal trading on inside information since 1980.
June 5--Levine pleads guilty to four felonies, agrees to cooperate with the government’s investigation and surrenders $11.6 million in illicit profits and restitution.
Nov. 14--Stock speculator Ivan F. Boesky agrees to pay a $100-million penalty to settle charges of trading on insider information supplied by Levine in 1985 and 1986. He also agrees to cooperate with investigators in a much broader investigation of Drexel and its junk bond chief, Michael Milken. In April, 1987, Boesky pleads guilty and is sentenced to three years in prison.
Early 1987--Drexel posts a $523-million net profit for 1986 as the market booms for high-risk, high-yield junk bonds.
Feb. 20, 1987--Levine is sentenced to two years in prison and fined $362,000 on charges of securities fraud, tax evasion and perjury.
Aug. 4, 1988--A grand jury indicts five partners in the investment firm Princeton/Newport Partners and a former Drexel trader over an alleged multimillion-dollar fraud and racketeering scheme, the first-ever racketeering charge against securities professionals. Defendants deny wrongdoing and their attorneys call the indictment a pressure tactic to force their cooperation in a much larger investigation of Drexel. The firm liquidates in December.
Sept. 7--The SEC accuses Drexel, Milken and three other employees of violating a wide range of securities laws, most in connection with Boesky. Drexel and the others deny the accusations.
Nov. 30--Secret negotiations are reported between Drexel and federal prosecutors in an attempt by the firm to avert an indictment, particularly racketeering charges, which carry enormous penalties.
Dec. 21--Drexel agrees to plead guilty to six felonies and pay a record $650 million in fines and restitution to settle the biggest securities fraud case in history. Under the settlement, Drexel must also settle the related SEC litigation and cooperate in the government’s continuing investigation.
Jan. 25, 1989--The government files formal charges against Drexel, publicly detailing for the first time the accusations to which the firm will plead guilty. Most are related to the firm’s alleged relationship with Boesky.
Feb. 10--Milken asks a federal judge to reject or modify the plea agreement on the grounds that it violates his rights by forcing Drexel to fire him and withhold his multimillion-dollar 1988 pay. Milken charges Drexel was coerced into signing the pact because of the threat of racketeering charges.
March 10--Drexel reportedly agrees to ban Milken from the firm for life as part of the SEC settlement.
March 29--A federal grand jury indicts Milken, his brother Lowell Milken and former Drexel trader Bruce Newberg on 98 counts of racketeering and fraud. Potential penalties and fines under the counts amount to more than $12 billion plus prison terms.
April 7--Michael and Lowell Milken plead innocent to all charges at a federal court arraignment.
April 13--Drexel and the SEC announce a settlement of the civil fraud case that subjects the firm to federal monitoring for three years and forces it to sever ties with Michael Milken.
April 18--Drexel announces that it is selling its retail brokerage unit, which has 2,300 employees and 1,200 brokers.
June 15--Milken resigns from Drexel after 19 years and forms his own consulting firm, which will not trade securities.
Feb. 4, 1990--Drexel posts a loss of $40 million for 1989, compared to a loss of $167 million in 1988.
Feb. 12--Drexel says it is seeking a major investor or merger partner because of deteriorating conditions in the junk bond market.
Feb. 13--Drexel Burnham Lambert Group officials say the company will file for protection from creditors under Chapter 11 of the U.S. Bankruptcy Code.
