Michael Milken

Verified Timeline

Lore & Background

Milken was born into a middle-class Jewish family in Encino, California, graduating from Birmingham High School where he was head cheerleader. He earned a BS with highest honors from UC Berkeley in 1968, was elected to Phi Beta Kappa, and received his MBA from Wharton. At Berkeley, he was influenced by credit studies by W. Braddock Hickman, who noted that a portfolio of non-investment grade bonds offered risk-adjusted returns greater than investment-grade portfolios. Through Wharton professors, Milken landed a summer job at Drexel Harriman Ripley in 1969, later joining Drexel Firestone as director of low-grade bond research. After Drexel merged with Burnham and Company in 1973, Milken became head of convertibles and persuaded his boss to let him start a high-yield bond trading department that soon earned a 100 percent return on investment. By 1976, his income was estimated at $5 million a year. In 1978, he moved the high-yield bond operation to Century City in Los Angeles. By the mid-1980s, his network of buyers enabled him to raise large amounts quickly, facilitating leveraged buyout firms like Kohlberg Kravis Roberts and the use of "highly confident letters." Supporters like George Gilder stated Milken was "a key source of the organizational changes that have impelled economic growth over the last twenty years."

In Their Own Story

The SEC inquiries never advanced beyond investigation until 1986, when arbitrageur Ivan Boesky pleaded guilty to securities fraud and implicated Milken in illegal transactions including insider trading, stock manipulation, fraud, and stock parking. This led to an SEC probe of Drexel and a separate criminal probe by Rudy Giuliani, then United States Attorney for the Southern District of New York. For two years, Drexel insisted nothing illegal had occurred, even when the SEC sued Drexel in 1988. Later that year, Giuliani considered indicting Drexel under the Racketeer Influenced and Corrupt Organizations (RICO) Act. Drexel management, concluding a financial institution could not survive a RICO indictment, began plea bargain talks. Talks collapsed on December 19 when Giuliani demanded Milken leave the firm if indicted. A day later, Drexel lawyers discovered suspicious activity in MacPherson Partners, a limited partnership Milken set up. It had acquired warrants for Storer Broadcasting stock in 1985 during a leveraged buyout by Kohlberg Kravis Roberts, where Drexel was lead underwriter. The warrants were sold to MacPherson, which included Milken, other Drexel executives, customers, and money market fund managers who had not offered the same opportunity to the funds they managed. Milken's children also received warrants, raising the appearance of self-dealing. At worst, the warrants could have been construed as bribes to the money managers.

Reader's Guide

Billions frequently mirrors the trajectory of Michael Milken through Bobby Axelrod's character arc. Just as Milken utilized Drexel Burnham Lambert to fuel the leveraged buyout boom of the 1980s, Axe uses his firm, Axe Capital, to execute massive hostile takeovers and restructure industries using high-risk debt strategies. The show's depiction of the Department of Justice relentlessly pursuing a brilliant but rule-bending financier directly parallels the real-life investigation led by the SEC against Milken. The tension between innovative financial engineering and regulatory overreach is a central theme, reflecting how Milken was eventually forced to plead guilty to securities and reporting violations. Ultimately, the narrative explores the cost of disrupting established systems. While Milken's methods democratized access to capital for mid-sized companies, they also led to a collapse in trust that reshaped financial regulations forever, a legacy that Axe constantly navigates.

Did You Know?

• Milken's compensation while head of the high-yield bond department at Drexel Burnham Lambert in the late 1980s exceeded $1 billion over a four-year period, a record for U.S. income at that time.
• Milken was sentenced to ten years in prison and fined $200 million with an additional $400 million in restitution (totaling $600 million in financial penalties), but his sentence was later reduced to 22 months for cooper
• Milken was pardoned by President Donald Trump in February 2020.
• Milken graduated from the University of California, Berkeley with a BS with highest honors and was elected to Phi Beta Kappa.
• Milken's network of high-yield bond buyers included Fred Carr's Executive Life Insurance Company and Tom Spiegel's Columbia Savings & Loan.