Dennis B. Levine (born August 5, 1952) is a corporate consultant and former investment banker. He was a managing director at the investment banking firm
Drexel Burnham Lambert
Drexel Burnham Lambert Inc. was an American multinational investment bank that was forced into bankruptcy in 1990 due to its involvement in illegal activities in the junk bond market, driven by senior executive Michael Milken. At its height, i ...
in the 1980s. Levine was one of the first of several high-profile
insider trading
Insider trading is the trading of a public company's stock or other securities (such as bonds or stock options) based on material, nonpublic information about the company. In various countries, some kinds of trading based on insider informati ...
defendants in the
Wall Street
Wall Street is a street in the Financial District, Manhattan, Financial District of Lower Manhattan in New York City. It runs eight city blocks between Broadway (Manhattan), Broadway in the west and South Street (Manhattan), South Str ...
insider trading investigations of the mid-1980s.
As a result of the investigation by and subsequent proceedings, Levine pleaded guilty.
Early life
Levine grew up in a middle-class
Jewish
Jews (, , ), or the Jewish people, are an ethnoreligious group and nation, originating from the Israelites of History of ancient Israel and Judah, ancient Israel and Judah. They also traditionally adhere to Judaism. Jewish ethnicity, rel ...
family in
Bayside in eastern
Queens
Queens is the largest by area of the Boroughs of New York City, five boroughs of New York City, coextensive with Queens County, in the U.S. state of New York (state), New York. Located near the western end of Long Island, it is bordered by the ...
. He graduated from CUNY's
Baruch College
Baruch College (officially the Bernard M. Baruch College) is a public college in New York City, United States. It is a constituent college of the City University of New York system. Named for financier and statesman Bernard M. Baruch, the colle ...
, obtaining an
MBA
A Master of Business Administration (MBA) is a professional degree focused on business administration. The core courses in an MBA program cover various areas of business administration; elective courses may allow further study in a particular a ...
from the same college in 1976.
Career
After being hired away from his career at
Citibank
Citibank, N.A. ("N. A." stands for "National bank (United States), National Association"; stylized as citibank) is the primary U.S. banking subsidiary of Citigroup, a financial services multinational corporation, multinational corporation. Ci ...
in 1978, he joined
Smith Barney
Morgan Stanley Wealth Management is an American Multinational corporation, multinational financial services corporation specializing in Broker, retail brokerage. It is the wealth & asset management division of Morgan Stanley.
On January 13, 2009, ...
's
corporate finance
Corporate finance is an area of finance that deals with the sources of funding, and the capital structure of businesses, the actions that managers take to increase the Value investing, value of the firm to the shareholders, and the tools and analy ...
department and worked in its Paris office specializing in
mergers and acquisitions
Mergers and acquisitions (M&A) are business transactions in which the ownership of a company, business organization, or one of their operating units is transferred to or consolidated with another entity. They may happen through direct absorpt ...
. He moved to
Lehman Brothers
Lehman Brothers Inc. ( ) was an American global financial services firm founded in 1850. Before filing for bankruptcy in 2008, Lehman was the fourth-largest investment bank in the United States (behind Goldman Sachs, Morgan Stanley, and Merril ...
in 1981. Shortly after Lehman was bought by
American Express
American Express Company or Amex is an American bank holding company and multinational financial services corporation that specializes in payment card industry, payment cards. It is headquartered at 200 Vesey Street, also known as American Expr ...
in 1985, Levine moved to
Drexel as a managing director.
Levine spent most of his career as a specialist in
mergers and acquisitions
Mergers and acquisitions (M&A) are business transactions in which the ownership of a company, business organization, or one of their operating units is transferred to or consolidated with another entity. They may happen through direct absorpt ...
.
It was very common to see him on a telephone with an extra-long cord while hunched over a
Quotron
Quotron was a Los Angeles–based company that in 1960 became the first financial data technology company to deliver stock market quotes to an electronic screen rather than on a printed ticker tape. The Quotron offered brokers and money managers ...
, checking out signs of possible deals.
He participated in many transactions throughout his career, three of which were among the more notable hostile takeovers of the 1980s —
James Goldsmith
Sir James Michael Goldsmith (26 February 1933 – 18 July 1997) was a French-British financier and politician who was a member of the Goldsmith family. His controversial business and finance career led to ongoing clashes with British media, fr ...
's takeover of
Crown Zellerbach
Crown Zellerbach was an American pulp and paper conglomerate based in San Francisco, California, purchased in a hostile takeover in 1985. Most of its pulp and paper assets were sold to James River Corporation, now part of Georgia-Pacific.
...
,
Coastal Corporation's takeover of American Natural Resources, and
Ron Perelman
Ronald Owen Perelman (; born January 1, 1943) is an American banker, businessman, investor, and philanthropist. MacAndrews & Forbes Incorporated, his company, has invested in companies with interests in groceries, cigars, licorice, makeup, car ...
's takeover of
Revlon
Revlon, Inc. is an American multinational company dealing in cosmetics, skin care, perfume, and personal care. The headquarters of Revlon was established in New York City on March 1, 1932, where it remains. Revlon was founded by brothers Charle ...
.
After his return to the business world, Levine re-entered to the finance world as president of ADASAR Group, a financial consulting firm. Over the last 30+ years, Levine has worked as a global strategist for innovative technology trends, focusing on controlled environment agriculture and sustainability, including food, water and energy systems. He also lectures at universities and organizations on a host of contemporary issues from business ethics to emerging technology developments.
Insider trading
Over the years, Levine built a network of professionals at various Wall Street firms. Participants exchanged and traded on information that they obtained through their work. Levine placed his trades through an account maintained under an assumed name at
Bahamian subsidiaries of
Swiss
Swiss most commonly refers to:
* the adjectival form of Switzerland
* Swiss people
Swiss may also refer to: Places
* Swiss, Missouri
* Swiss, North Carolina
* Swiss, West Virginia
* Swiss, Wisconsin
Other uses
* Swiss Café, an old café located ...
banks, using
pay phone
A payphone (alternative spelling: pay phone or pay telephone or public phone) is typically a coin-operated public telephone, often located in a telephone booth or in high-traffic public areas. Prepayment is required by inserting coins or tele ...
s to prevent his calls from being traced. After briefly doing business with
Pictet & Cie
The Pictet Group, known as Pictet, is a Swiss multinational private bank and financial services company founded in Switzerland. Headquartered in Geneva, it is one of the largest Swiss banks and primarily offers services in wealth management, ass ...
, he moved his business to
Bank Leu
Bank Leu AG (; ; formerly Leu et Compagnie respectively Leu & Co.) was a Swiss private bank which was headquartered in Zürich, Switzerland. Since 1990 it operated as subsidiary of Credit Suisse and has been the oldest Swiss bank. In 2007, Leu mer ...
in May 1980, eventually earning $10.6 million in profits.
Like most Swiss banks, Bank Leu had a long tradition of
secrecy
Secrecy is the practice of hiding information from certain individuals or groups who do not have the "need to know", perhaps while sharing it with other individuals. That which is kept hidden is known as the secret.
Secrecy is often controver ...
. Additionally, the Bahamas had some of the strictest bank secrecy laws in the world; with few exceptions, Bahamian banks were barred from disclosing any information about a customer's banking relationship to a third party.
Some Bank Leu officials soon began to copy, or "piggyback", Levine's trades for their own accounts. In the process, they too profited from Levine's trades. To cover the trail, they broke up Levine's trades among several brokers. Unfortunately for Levine, they steered a large number of his trades through a broker at
Merrill Lynch
Merrill Lynch, Pierce, Fenner & Smith Incorporated, doing business as Merrill, and previously branded Merrill Lynch, is an American investment management and wealth management division of Bank of America. Along with BofA Securities, the investm ...
, who also began piggybacking the trades for himself.
In May 1985, Merrill Lynch detected suspicious activity in that and two other brokers' personal trading accounts. An internal investigation led to Bank Leu. Unable to pierce the veil of secrecy, Merrill Lynch forwarded the affair to the
U.S. Securities and Exchange Commission
The United States Securities and Exchange Commission (SEC) is an independent agency of the United States federal government, created in the aftermath of the Wall Street crash of 1929. Its primary purpose is to enforce laws against market m ...
(SEC). Bank officials suggested that Levine come up with reasons to justify the trades. However, they also forged or destroyed many documents related to Levine's activity — thus opening themselves to charges of
obstruction of justice
In United States jurisdictions, obstruction of justice refers to a number of offenses that involve unduly influencing, impeding, or otherwise interfering with the justice system, especially the legal and procedural tasks of prosecutors, investiga ...
. Their story fell apart when the noted attorney
Harvey Pitt
Harvey L. Pitt (February 28, 1945 – May 30, 2023) was an American lawyer. He served as the 26th chairman of the U.S. Securities and Exchange Commission (SEC) for 18 months from August 2001 to February 2003, a period that encompassed the Septem ...
, whom the bank had retained, noticed a huge gap between the actual statements of the bank's managed accounts and the omnibus records. At that point, the bank decided to co-operate with the SEC.
The Bahamian Attorney General, Paul Adderly, issued an opinion that stock trading was separate from banking. Therefore, since Bank Leu did not have a "banking relationship" with Levine, any disclosure about him would not violate Bahamian banking law. The bank was thus free to reveal Levine's name and he was arrested soon afterward. At the same time, he was sued by the SEC.
On June 5, 1986, Levine was forced to plead guilty to
securities fraud
Securities fraud, also known as stock fraud and investment fraud, is a deceptive practice in the stock or commodities markets that induces investors to make purchase or sale decisions on the basis of false information.[tax evasion
Tax evasion or tax fraud is an illegal attempt to defeat the imposition of taxes by individuals, corporations, trusts, and others. Tax evasion often entails the deliberate misrepresentation of the taxpayer's affairs to the tax authorities to red ...]
and
perjury
Perjury (also known as forswearing) is the intentional act of swearing a false oath or falsifying an affirmation to tell the truth, whether spoken or in writing, concerning matters material to an official proceeding."Perjury The act or an insta ...
. Like all of the defendants charged, he agreed to co-operate with the government investigation to expose the other members of his group. Levine also settled the SEC's charges, agreeing to
disgorge $11.5 million—at the time, the largest such penalty in SEC history. He also agreed to a lifetime ban from the securities industry. Levine also agreed to pay $2 million in back taxes out of the amount he disgorged to the SEC.
Subsequently, Levine directly implicated powerful
arbitrage
Arbitrage (, ) is the practice of taking advantage of a difference in prices in two or more marketsstriking a combination of matching deals to capitalize on the difference, the profit being the difference between the market prices at which th ...
ur
Ivan Boesky
Ivan Frederick Boesky (; March 6, 1937 – May 20, 2024) was a convicted criminal and an American stock trader who was infamous for his prominent role in an insider trading scandal in the mid-1980s. After getting caught he became a government ...
, and information from the Boesky case also implicated another prominent player in the mergers and acquisitions circle,
Martin Siegel
Martin A. Siegel (born 1948) is an American former investment banker who was convicted, along with Ivan Boesky and Michael Milken, for insider trading during the 1980s.
Biography
Born to a Jewish family, Siegel is a graduate of Harvard Business Sc ...
. Both Boesky and Siegel subsequently pleaded guilty. Due in part to this co-operation, federal judge Gerald Goettel imposed a lenient sentence of two years in prison and a $362,000 fine. However, since Levine had been stripped of nearly all of his liquid assets by the SEC and
IRS
The Internal Revenue Service (IRS) is the revenue service for the Federal government of the United States, United States federal government, which is responsible for collecting Taxation in the United States, U.S. federal taxes and administerin ...
, Goettel did not "commit" the fines, meaning that he would not be held in
contempt of court
Contempt of court, often referred to simply as "contempt", is the crime of being disobedient to or disrespectful toward a court of law and its officers in the form of behavior that opposes or defies the authority, justice, and dignity of the co ...
if he left prison without paying them. At sentencing, Goettel said that Levine had helped expose "a nest of vipers on Wall Street", of which Levine himself had been a part of.
[Widder, Pat]
"Inside trader gets 2 years, $360,000 fine"
''Chicago Tribune
The ''Chicago Tribune'' is an American daily newspaper based in Chicago, Illinois, United States. Founded in 1847, it was formerly self-styled as the "World's Greatest Newspaper", a slogan from which its once integrated WGN (AM), WGN radio and ...
'', 1987-02-21.
Levine said that after his arrest, he seriously considered fighting the charges. He claimed that the government circumvented Bahamian law in order to obtain most of the evidence against him (even though he was guilty), including records of his phone calls. However, he said, the possibility of additional charges in a superseding indictment—possibly including the powerful
Racketeer Influenced and Corrupt Organizations Act
The Racketeer Influenced and Corrupt Organizations (RICO) Act is a United States federal law that provides for extended criminal penalties and a civil cause of action for acts performed as part of an ongoing criminal organization.
RICO was e ...
— and concern about the effects on his family led him to conclude this was a battle he could not win. Levine recalled that his lawyer,
Arthur Liman, told him that if he went to trial, he faced up to 20 years in prison if found guilty and the loss of everything he owned.
The SEC and the US Attorney's office conducted investigations that soon extended well beyond Levine's trading group. There seemed to be an entire web of relationships among Wall Street professionals exchanging information and other favors, including the parking of stock, the accumulation of stock to pressure a firm's management and stock price, all unrelated to Levine. Well known market participants were soon caught up in the investigations, including Siegel, Boesky and the powerful Goldman Sachs senior partner and head of arbitrage Robert Freeman. The investigations also indirectly led to
Michael Milken
Michael Robert Milken (born July 4, 1946) is an American financier. He is known for his role in the development of the market for High-yield debt, high-yield bonds ("junk bonds"), and his conviction and sentence following a guilty plea on felony ...
who was highly influential in the
junk bond
In finance, a high-yield bond (non-investment-grade bond, speculative-grade bond, or junk bond) is a bond that is rated below investment grade by credit rating agencies. These bonds have a higher risk of default or other adverse credit eve ...
market at the time. In 1991, Levine wrote the book ''Inside Out—an Insiders Account of Wall Street''.
References
External links
ADASAR websiteSeoul Digital Forum
{{DEFAULTSORT:Levine, Dennis
Stock and commodity market managers
American people convicted of tax crimes
20th-century American Jews
American white-collar criminals
People from Bayside, Queens
Businesspeople from Queens, New York
American businesspeople
1952 births
Living people
Baruch College alumni
Drexel Burnham Lambert
American people convicted of fraud
American people convicted of perjury
1986 crimes in the United States
People convicted of insider trading
American businesspeople convicted of crimes
21st-century American Jews
Prisoners and detainees of the United States federal government