Summary of Den of Thieves by James B Stewart

I want to share with you the story of Dennis, Ivan, Mike and others in a Summary of Den of Thieves by James B. Stewart.

It’s the story of greed, that I see all too often, not just in others but sometimes in myself!

I wanted to share with you the story of how Dennis, Ivan, Mike and others almost destroyed Wall Street, making billions and breaking the law.

Den of Thieves is a non-fiction story of insider trading and market manipulation that happened in the 1980s.

It’s written, however, like a fiction novel.

So you can see the point of view and the feelings of the people in the story.

Basically there are many different people, who from different firms around Wall Street, decide in one way or the other to break the law and manipulate the market for their own self interests.

Most felt that they were too smart to get caught, or that everyone else was doing it so why shouldn’t they, or they were just greedy for money, power and fame.

Insider Trading

Some like Dennis Levine, decide to do insider trading, which is to trade on information that you know because you have secret information involving a deal only insiders of a company know about.

Dennis Levine created a network of contacts, who would trade information about what deals their investment firms were doing, before they were made public.

When he was caught, it was pretty easy to tell it was insider trading because he bought right before a public announcement that would bring a stock price up, and then sell right before an announcement that would bring a stock price down.

However, the reason it was different from any other case at the time, was that usually insider trading is an isolated incident of one employee knowing about something in their company, and trading once on that.

Dennis Levine created a network which was in the investment banks, and this created a constant stream of insider trades.

One of the people that Dennis Levine was in contact with, Ivan Boesky, ended up leading the General Attorney’s Office and the SEC to even more market manipulation, but this time to create and make corporate takeovers with the most powerful being Micheal Milken, at the time the Junk Bond King.

Manipulating The Market To Takeover Corporations

Mike Milken and Martin Siegel, among others, started to use a network of contacts to “put companies in play”.

What this means is that you would get a big player/investor to buy shares of a company, so that it looks like that investor is planning to take over the company.

You use that to manipulate the stock price of the company so that it’s more or less appealing for you or an opponent to do a takeover.

Mike Milken and Martin Siegel would use people like Ivan Boesky for these maneuvers, because he was outside of the investment banking firm, and was not supposed to have access to inside information.

Parking

They would also move securities around to satisfy capital requirements, which are restrictions on how much stock you could have, based on how much capital your company has.

This was called parking.

They would have others buy stock from them and sell it back, and compensate them for any loss or give them back money or favors if there was any gain.

Creating Debt (Junk Bonds) To Buy Corporations

Michael Milken by far was the most clever when it came to creating money out of nothing, when he started promoting and creating a junk bond empire.

He used studies to prove to investors that a diversified portfolio of junk bonds performed better over time than other investments.

Then he would create junk bonds for company’s that needed cash, some for their own operations and later so that they could take over other companies.

Some of the investors he helped were raiders, who wanted to take over a company, and take it apart and sell the parts.

Some just wanted to expand their empires.

The junk bond debt sometimes ballooned larger than the company could repay, and instead of defaulting, Milken would create another junk bond to pay off the first, and delay the default.

This became apparent when Milken was forced to resign, and all the junk bonds started to default.

My Favorite Part of The Book – Ivan Boesky

My favorite part of the book was when Ivan Boesky almost lost all his money and his company (which was really his wife’s money).

He was in a deal that he did all the research for, it was supposed to go through.

And it didn’t.

He called Martin Siegel who helped him save his company by helping with options placements.

After that incident, Ivan Boesky decided he had to only play the game “safe” which means to only trade with insider information.

He basically realized that even if you’ve done all your homework, in the end investing is not a sure thing.

So, since he liked to invest large sums of money, which put his company in danger, sooner or later, one of his bets would lose and he will be out of the game permanently.

So he started helping Martin Siegel and for the most part, Michael Milken. In the end, he came to fear Mike, and would do pretty much anything he said.

I think it was my favorite part, because it was a turning point in his life.

He stopped being the person he wanted to be because of fear, and then he came under the control of others because of his greed.

Greed vs. Wealth

I think the biggest theme for me was how people were just so greedy, and whether breaking the law meant something to them or not.

Most of them, like Michael Milken, didn’t care at all for the law. He stole from his own employees, taking huge amounts of profit out of deals and his greed ended up being his downfall, when he wanted Boesky to give him his $5.3 million dollars so quickly that they couldn’t cover their tracks.

Michael Milken wanted to be powerful, wealthy, and he was very greedy. He didn’t care about the people or companies that he destroyed or hurt to get there.

Martin Siegel on the other hand, also broke the law, but he did it to do well at work, so that he could keep up a lifestyle he liked.

He felt guilty about it, and knew it was wrong.

He also did it to save his company from going out of business.

So he wasn’t only thinking of himself.

Though he was too weak to be in integrity with himself.

Then there was one man who worked for a firm that helped Milken do a lot of his parking. The SEC was interviewing a man who was fired, and they found out that he was fired because he refused to the illegal parking.

He refused to break the law and he was fired.

He was the one who told them that phone conversations are recorded, and they had a huge breakthrough in the case, and got recordings of people at the firm doing illegal parking.

All the different stories really got me thinking about greed and wealth.

I personally feel wealthy when I’m helping everyone including myself.

I feel terrible when I am greedy, which is when I’m serving my own self interest while hurting others.

What would I have done in these situations?

What would have happened if I were there?

Conclusion

This is a great book.

It will help you understand how Wall Street functions, it’s flaws and the reasons for the laws that are in place.

It will give you an idea of what greed and power do to investment bankers and the financial sector.

I also enjoyed reading about the law enforcement side, and what they had to go through as well.