Class, Please Welcome Mr. Milken
Forget the jail time, the savings and loan crisis and the toupee. Former junk bond king Michael Milken made his debut as a professor this week, and his UCLA students were, well, totally psyched.
Few could cite the securities fraud charges for which Milken was imprisoned, but nearly all of them seemed to know about his personal finances. As Michael Seery put it: “He made $550 million in one year. It blows your mind.”
Actually, Milken probably made more, although that’s all in the past. Looking less at home behind a lectern than at his old X-shaped desk (he had some trouble with the overhead projector), Milken nonetheless held the 60 MBA students rapt during a three-hour session on corporate finance complete with props, charts and a drawing exercise that he once used to motivate the sales force at Drexel Burnham Lambert.
“He’s the best finance guy since J. P. Morgan,” second-year student Jeff Stargardter said during a break. “This is a great opportunity.”
The faculty at the John E. Anderson Graduate School of Management was ambivalent at first when the former Wall Street Wunderkind began discussing the possibility of teaching with the administration shortly after he was released from federal prison in January.
But after a protracted review process, Associate Dean Carol Scott says, the value of Milken’s experience outweighed any potential controversy. When the course was listed, it quickly became the hottest ticket on campus.
“We’re not putting him up there as a role model of any sort,” said Scott, who is also faculty chairwoman. “What Milken did in the whole junk bond period really did change the face of corporate America, and I don’t think there is any more dramatic way of learning about history than having one of its central participants there.”
Milken’s class--Management 298D: Corporate Finance, Financial Institutions and Investing--is officially run by Bradford Cornell, who has taught finance at UCLA since 1979 and says he will voice his dissension from Milken’s views when he feels it is necessary.
Apparently it wasn’t necessary on the new instructor’s first day. Milken enthralled his audience with his charismatic style and depth of experience.
“What is risk?” demanded the former junk-bond financier. “There’s risk in everything. There’s risk when you walk across the street. There’s risk in owning government securities. There’s risk in owning IBM. When there’s no risk, there’s no future.”
As in the past, there was no evidence that Milken was having any problems with self-esteem. At one point he breezed through an economic plan he insisted could have averted the former Soviet Union’s social problems. A subsequent class, Milken said, will focus on “one of my favorite topics, perception versus reality.”
Although Milken encouraged students to challenge him--”you can never insult me,” he insisted--several of them admitted to an initial awe of his celebrity.
“It’s the first class, so everyone’s a little intimidated,” one student said. “But people will be more willing to challenge him later. The guy went to jail, for God’s sake. He doesn’t care what we ask him.”
Since serving nearly two years at a minimum-security prison camp in Pleasanton, Calif., the man who single-handedly popularized the high-yield, high-risk securities known as junk bonds has moved back to Encino and begun three years of court-mandated community service, expanding an after-school program run by DARE, the nonprofit Drug Abuse Resistance Education program.
At 47, Milken remains a controversial figure. Blamed by many for the leveraged buyouts that left many American corporations burdened with debt, he is also credited by others with vastly widening access to capital, helping businesses like MCI Communications, Turner Broadcasting and Tele-Communications Inc. grow into giants.
Although Milken is not being paid for teaching at UCLA, neither is the class pure philanthropy. His fledgling Education Entertainment Network, which he says will provide educational programming for cable television beginning in 1995, is videotaping his lectures. He hopes to market the videos to corporations and educational institutions.
Milken has not said much about the network, but he said after class Wednesday night that he plans to air the 1,000 hours of videotaped Drexel meetings, to which he says he owns exclusive rights, as part of his effort to restore his battered reputation.
Milken said the tapes feature such renowned corporate chieftains as the late Steve Ross of Time Warner and the late William McGowan of MCI. If that sounds a trifle dull for a network that’s supposed to entertain as well as educate, Milken says the tapes include “Ted Turner stand-up routines that will beat anything on ‘Seinfeld.’ ”
A federal grand jury indicted Milken on 98 counts of securities violations, including insider trading. In 1990, he pleaded guilty to six narrow felony counts, denying insider trading but admitting to manipulating stock prices. As for UCLA, Milken insists he wants to help students examine the past in order to re-evaluate the present. If some students still suspect that they may be part of his plan to rehabilitate himself, that’s OK with them.
“So maybe after what he’s been through he wants to associate himself with a credible institution--no one does anything for nothing,” student Mike Santini said. “He’s going to benefit, but it’s going to benefit us too.”
