Payback Quotes

“Finally, Chestman is distressing because of how prosecutorial discretion was exercised. Loeb was the one party who knew the information was confidential in the case, though all he did was break a promise to his wife to keep it confidential. However trivial, this is the kind of peg prosecutors usually feel they need to hang their hat on. The government, however, declined to prosecute Loeb and instead went after Chestman, the stockbroker, who broke no promises and misappropriated from no one but could be more easily painted to a court and jury as presumptively unsavory.”
― Daniel Fischel, Payback: The Conspiracy to Destroy Michael Milken and his Financial Revolution

“Criminalizing an activity without defining it runs counter to powerful traditions in American law. Defendants have a constitutional right to fair notice that behavior is criminal. Unlike certain highly repressive Communist or other dictatorial nations, America has no tradition of common-law crimes, where courts can declare conduct criminal on a case-by-case basis.”
― Daniel Fischel, Payback: The Conspiracy to Destroy Michael Milken and his Financial Revolution

“In explaining why the ITSFEA contained no definition, Chairman Dingell's committee merely waved its hands, saying that it "did not believe that the lack of consensus over the proper delineation of an insider trading definition should impede progress on the needed enforcement reforms encompassed within this legislation." The inability to define insider trading, in other words, is no reason not to increase the penalties faced by those who engage in the practice, whatever it might be!”
― Daniel Fischel, Payback: The Conspiracy to Destroy Michael Milken and his Financial Revolution

“The takeover boom of the 1980s certainly had its share of unsavory and dishonest characters. Dennis Levine, Martin Siegel and Ivan Boesky were the best known, but they weren’t alone. All were made possible by the uncertainty and the market for information, legal and illegal, that federal and state regulation had created, for without government intervention in financial markets, they would never have been able to profit by this information during the wait periods imposed by tender offer regulation in the first place.”
― Daniel Fischel, Payback: The Conspiracy to Destroy Michael Milken and his Financial Revolution

“Rule 14e-3 does not protect shareholders. It hurts them because it makes value-increasing takeovers, and the increases in wealth that they create, less likely.”
― Daniel Fischel, Payback: The Conspiracy to Destroy Michael Milken and his Financial Revolution

“Differences in information and judgment are precisely what creates the possibility of gain in the market. These differences, and the ability to trade on them, are what distinguish a market where goods and services are allocated, and their value determined, from a gambling casino or a lottery. Presumably not even the government wanted to turn our securities markets into pure games of chance.”
― Daniel Fischel, Payback: The Conspiracy to Destroy Michael Milken and his Financial Revolution

“If the law prohibited informed trading, requiring the buyer to reveal the probable existence of mineral deposits, the incentive to search and innovate would be effectively eliminated.”
― Daniel Fischel, Payback: The Conspiracy to Destroy Michael Milken and his Financial Revolution

“During the entire decade of the 1980s, the government never developed a theory of why insider trading was harmful or a rationale for deciding whom and when to prosecute—or even of what, exactly, insider trading was. Neither the SEC, Congress, nor the courts have yet, up to the present day, been able to define what constitutes insider trading—what separates diligent research and smart trading based on it, from criminal behavior.”
― Daniel Fischel, Payback: The Conspiracy to Destroy Michael Milken and his Financial Revolution

“On Black Monday, October 19, the Dow Jones Industrial Average dropped 508 points, or 22.6 percent, and the New York Stock Exchange lost $1 trillion in value. Many feared that Black Monday was a repeat of the stock market crash in 1929, which signaled the Great Depression of the 1930s. Nobody wanted history to repeat itself, and Congress did not want to be blamed for causing the collapse of financial markets. Support for antitakeover legislation, which was perceived as a contributing cause of Black Monday, disappeared.”
― Daniel Fischel, Payback: The Conspiracy to Destroy Michael Milken and his Financial Revolution

“Takeovers, Regan wrote, "perform several beneficial functions in our economy. First, they provide a means—sometimes the only feasible means—of policing management in widely held corporations. Second, they help identify undervalued assets and . . . help realize efficiencies by reallocating capital and corporate assets into more highly valued uses.”
― Daniel Fischel, Payback: The Conspiracy to Destroy Michael Milken and his Financial Revolution

“Getting the government on your side when you are facing a tough fight in the marketplace is a time-honored technique in American economic history. The usual approach is to equate the competitive threat to you with injury to society, to exaggerate the magnitude of the danger beyond recognition, then claim that government regulation is the only solution. Whether the fight is between domestic versus foreign producers, railroads versus truckers, or optometrists versus ophthalmologists, the pattern is always the same. So too in the clash between the establishment defenders and the takeover entrepreneurs.”
― Daniel Fischel, Payback: The Conspiracy to Destroy Michael Milken and his Financial Revolution

“It seemed as if any claim about debt financing, no matter how illogical, could be made with a straight face. Andrew Sigler, for example, warned of the "billions in equity taken off corporate balance sheets" by successful acquisitions. The inevitable consequence of withdrawing equity, Sigler concluded, was to weaken companies and leave them unable to compete. But equity does not "disappear" when one firm acquires another. The target may cease to exist as an independent entity, but its assets remain intact and are simply transferred to the acquirer. Nothing is lost. And when measured by market value, the total value of corporate equities increased dramatically during the 1980s.”
― Daniel Fischel, Payback: The Conspiracy to Destroy Michael Milken and his Financial Revolution

“New successful products, particularly Teddy Grahams snack food, were introduced. Debt was quickly paid down using proceeds from asset sales and the sale of new equity. By the end of 1991, the RJR Nabisco buyout created more than $10 billion of value for investors. The critics, like Time, who predicted the buyout would threaten American survival and lead to anarchy could not have been more wrong.”
― Daniel Fischel, Payback: The Conspiracy to Destroy Michael Milken and his Financial Revolution

“During the 1980s, the Dow Jones Industrial Average tripled from 1,000 to 3,000 and the real value of public firms' equity more than doubled from $1.4 to $3 trillion. Selling shareholders alone received $750 billion in gains (measured in 1992 dollars) from restructuring transactions between 1976 and 1990. Millions of new jobs were created in the process.”
― Daniel Fischel, Payback: The Conspiracy to Destroy Michael Milken and his Financial Revolution