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SEC Investigates Michael Milken Regarding His Relationship with Guggenheim Partners


/By Leonard Dreyer/

Michael Milken, the enfente terrible of Wall Street in the 1990s and the man who made the term Junk Bonds into a pejorative, may be headed for trouble again with the Securities Exchange Commission (SEC).

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Michael Milken/ Getty

Michael Milken/ Getty

Milken, 66, has spent years attempting to rehabilitate his image after having spent 22 months in prison in the early 1990s following a plea bargain which had him plead guilty to federal charges of securities and tax fraud. A part of the bargain banned him from operating in the industry. Shortly after his release from prison, the SEC alleged that Milken had violated the ban by advising Ron Perelman and Rupert Murdoch on deals. In 1998 Milken settled the SEC’s claim for $47 million without admitting or denying any wrongdoing.

The 1990 plea bargain agreement specified a lifetime ban on his dealing in securities. The Securities and Exchange Commission is now investigating whether or not this billionaire philanthropist has kept his word. The SEC believes Milken violated the terms of the ban and has been dealing with Guggenheim Partners – a firm that manages over $170 billion in securities.

Milken isn’t banned from all activity on Wall Street.  Under the terms of the plea bargain he agreed to a lifetime ban on operating as a broker or advisor for client investments, but he still can manage and invest his own money. So what is the SEC’s concern?  The SEC is concerned that Milken isn’t just managing his own money, but that he’s acting as a manager for Guggenheim, in clear violation of his plea bargain with the SEC. If Milken is offering brokerage and exchange advice and receiving compensation, the SEC will uncover this. Currently the SEC is investigating one instance where Milken may have managed funds for compensation. Milagro – a company that recently purchased Petrohawk Energy for $825 million – is a venture in which both Milliken and Guggenheim have invested. The SEC is investigating whether or not Milken received compensation for managing his investments and those of other parties associated with the Milagro fund.


Guggenheim’s president, Todd Boehly, has already handed over documents regarding transactions related to Milken, including emails, records and financial statements. The SEC investigation hasn’t turned up a great deal in what is already a two-year long investigation. Guggenheim has denied Milken’s involvement in any investments other than his own.

A prostate cancer survivor, Milken has led charity efforts involving cancer research and education. (Guggenheim’s Boehly is active in Milken’s prostate cancer foundation.)

A spokesperson for Milken provided the following statement: “For the past 20 years, Michael Milken has devoted the overwhelming majority of his time to philanthropic initiatives, especially in education and as an advocate for medical research on a wide range of life-threatening diseases. Mr. Milken has had no desire to be in the securities business in any capacity and has strictly avoided doing anything that could be interpreted otherwise.”




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