GREED IS GOOD?

We saw five largest independent security firms on Wall Street were gone with wind. Here is another case which told you why it's a highly risky industry.

Drexel Burnham Lambert, a major Wall Street investment banking firm, rose to prominence implementing the ideas of its star trader Michael Milken, who created a junk-bond market where once there was none.
On November 14, 1986 – known on Wall Street as Boesky day – federal prosecutors revealed that Ivan Boesky, a close associate of Milken, had pled guilty to charges of insider trading and was going to cooperate with the government in its investigations. A few years later, Milken was indicated on 98 counts that included stock manipulation, insider trading and racketeering. In a plea bargain, Milken pled guilty to six charges and was sentenced to 10 years in prison.
Without him, Drexel Burnham Lambert’s business began to fall apart, and as the company was driven by its involvement in illegal junk bond activities into bankruptcy, the U.S. economy stumbled toward a recession. In 1990, default rates on junk bond skyrocketed.
Ironically, the junk-bond market rebounded shortly thereafter, and many mutual funds have been established that invest exclusively in high-yield bonds. However, in 2007 and 2008, investor appetite for junk bonds vanished amid mounting fallout from a global credit crisis, including the near-collapse of Lehman Brothers.
Boesky in part was inspiration for Oliver Stone’s “Wall Street”, and its famous line, “Greed is good,” echoed an actual comment made by Boesky in a commencement address at Berkeley’s School of Business. Boesky said to the students, “Greed is all right, by the way. I want you to know that. I think greed is healthy. You can be greedy and still feel good about yourself.”