2 How are we to live The ultimate choice 3 County, outside New York City. He was a notable member In the same year that this autobiography was published, at of the Republican Party, and some thought he cherished the height of his success, Boesky entered into an arrangement political ambitions. He held positions at the American Ballet for obtaining inside information from Dennis Levine. Levine Theater and the Metropolitan Museum of Art who was himself earning around $3 million annually in sala Unlike other arbitragers before him, Boesky sought to pub- and bonuses, worked at Drexel Burnham Lambert, the phe licize the nature of his work, and aimed to be recognized as nomenally successful Wall Street firm that dominated the expert in a specialized area that aided the proper function- junk bond market. Since junk bonds were the favoured way 085 he published a book about arbi- of raising funds for takeovers, Drexel was involved in almo trage entitled Merger Mania. The book claims that arbitrage every major takeover battle, and Levine privy to infor contributes to 'a fair, liquid and efficient market' and states nation that, in the hands of someone with plenty of capital, that undue profits are not made: there are no esoteric tricks could be used to make hundreds of millions of dollars vir- that enable arbitragers to outwit the system.. profit oppor tually without risk tunities exist only because risk arbitrage serves an important The ethics of this situation are not in dispute. When Boesky market function. Merger Mania begins with a toucher was buying shares on the basis of the information Levine gave dedication him, he knew that the shares would rise in price. The share holders who sold to him did not know that. and hence sold the shares at less than they could have obtained for them Dedication later, if they had not sold. If Drexel,s client was someone who My father, my mentor, William H. Boesky (1900-1964),of wished to take a company over, then that client would have beloved memory, whose courage brought him to these shores to pay more for the company if the news of the intended from his native Ykaterinoslav, Russia, in the year 1912. My takeover leaked out, since Boesky's purchases would push up life has been profoundly influenced by my father's spirit and the price of the shares. The added cost might mean that the strong commitment to the well-being of humanity, and by his bid to take over the target company would fail; or it might mean that, though the bid succeeded after the takeover more emphasis on learning as the most important means to justice, mercy, and righteousness. His life remains an example of of the companys assets would be sold off, to pay for the increased borrowings needed to buy the company at the higher ommunity the benefits he had received price. Since Drexel, and hence Levine, had obtained the infor- hrough the exercise of God-given talents. mation of the intended takeover in confidence from their With this inspiration I write this book for all who wish to clients, for them to disclose it to others who could profit from learn of my specialty, that they may be inspired to believe that it, to the disadvantage of their clients, was clearly contrary to confidence in one s self and determination can allow one to all accepted professional ethical standards. Boesky has never become whatever one may dream. May those who read my suggested that he dissents from these standards. or believed book gain some understanding for the opportunity which exists that his circumstances justified an exception to them. Boesky niquely in this great land. 3 also knew that trading in inside information was illegal2 How ar e we to live ? County, outside New York City. He was a notable member of the Republican Party, and some thought he cherished political ambitions. He held positions at the American Ballet Theater and the Metropolitan Museum of Art. Unlike other arbitragers before him, Boesky sought to pub￾licize the nature of his work, and aimed to be recognized as an expert in a specialized area that aided the proper function￾ing of the market. In 1985 he published a book about arbi￾trage entitled Merger Mania. The book claims that arbitrage contributes to 'a fair, liquid and efficient market' and states that 'undue profits are not made: there are no esoteric tricks that enable arbitragers to outwit the system . . . profit oppor￾tunities exist only because risk arbitrage serves an important market function'. Merger Mania begins with a touching dedication: Dedication My father, my mentor, William H. Boesky (1900-1964), of beloved memory, whose courage brought him to these shores from his native Ykaterinoslav, Russia, in the year 1912. My life has been profoundly influenced by my father's spirit and strong commitment to the well-being of humanity, and by his emphasis on learning as the most important means to justice, mercy, and righteousness. His life remains an example of returning to the community the benefits he had received through the exercise of God-given talents. With this inspiration I write this book for all who wish to learn of my specialty, that they may be inspired to believe that confidence in one's self and determination can allow one to become whatever one may dream. May those who read my book gain some understanding for the opportunity which exists uniquely in this great land.3 T h e ultimat e choic e 3 In the same year that this autobiography was published, at the height of his success, Boesky entered into an arrangement for obtaining inside information from Dennis Levine. Levine, who was himself earning around $3 million annually in salary and bonuses, worked at Drexel Burnham Lambert, the phe￾nomenally successful Wall Street firm that dominated the 'junk bond' market. Since junk bonds were the favoured way of raising funds for takeovers, Drexel was involved in almost every major takeover battle, and Levine was privy to infor￾mation that, in the hands of someone with plenty of capital, could be used to make hundreds of millions of dollars, vir￾tually without risk. The ethics of this situation are not in dispute. When Boesky was buying shares on the basis of the information Levine gave him, he knew that the shares would rise in price. The share￾holders who sold to him did not know that, and hence sold the shares at less than they could have obtained for them later, if they had not sold. If Drexel's client was someone who wished to take a company over, then that client would have to pay more for the company if the news of the intended takeover leaked out, since Boesky's purchases would push up the price of the shares. The added cost might mean that the bid to take over the target company would fail; or it might mean that, though the bid succeeded, after the takeover more of the company's assets would be sold off, to pay for the increased borrowings needed to buy the company at the higher price. Since Drexel, and hence Levine, had obtained the infor￾mation of the intended takeover in confidence from their clients, for them to disclose it to others who could profit from it, to the disadvantage of their clients, was clearly contrary to all accepted professional ethical standards. Boesky has never suggested that he dissents from these standards, or believed that his circumstances justified an exception to them. Boesky also knew that trading in inside information was illegal