NEW YORK — Ivan F. Boesky, the fallen stock speculator whose name has come to symbolize avarice on Wall Street, on Friday received a three-year jail term for having violated securities laws through insider trading and other illicit practices.
The term was less than the maximum five years that Boesky faced after he pleaded guilty in April to a single felony count of conspiring to make false statements to the Securities and Exchange Commission. The charge relates to allegations that he illegally aided the 1984 takeover of Fischbach Corp., a New York company, by financier Victor Posner.
Thayer Case Cited
Of convicted insider traders, only W. Paul Thayer, the former deputy secretary of defense charged with tipping friends to merger plans by Anheuser-Busch and Allied Corp., on whose boards he sat, has received a longer term. Thayer, who pleaded guilty to a charge of obstructing justice, was sentenced to four years in jail and served 19 months.
In Boesky's case, U.S. District Judge Morris E. Lasker said that although the count carries a maximum penalty of $250,000, he chose not to impose a fine because Boesky's remaining financial assets should be husbanded to pay civil claims from defrauded investors and stockholders.
Responding to defense arguments that Boesky has already been harshly punished by giving up almost all of his wealth to compensate his market victims and by facing lifelong vilification, Lasker remarked: "Some kind of message must be sent to the business community that such activities cannot be wholly repaired simply by repaying people after the fact." Of Boesky's offense, he said that "its scope was too great, its influence too profound, its seriousness too substantial merely to forgive and forget."
Once Wall Street's leading "risk arbitrager," a stock trader who speculates in shares of companies involved in takeovers and other major transactions, Boesky, 50, is scheduled to begin serving his term next March 24.
Although no prison has been selected, he has asked to be sent to the federal prison in Lompoc, Calif., because, as one of his attorneys told Judge Lasker at a hearing Dec. 3, "there are no people in the trading business out there."
Eligible for Parole in Year
Under the rules governing his sentence, Boesky will be eligible for parole after one year and is likely to be released, assuming good behavior, after two.
The sentence follows weeks of maneuvering by prosecutors and defense attorneys striving to place his crimes, which include participating in the widest ring of insider trading ever exposed on Wall Street, in context with what prosecutors call his "unprecedented" testimony about his and others' wrongdoing. Among other things, he taped telephone conversations and wore hidden recorders to personal meetings that implicated colleagues.
Leon Silverman, Boesky's lead attorney at Friday's session, contended that his client has implicated five major securities firms and 18 individuals still under investigation. It was unclear if Silverman's numbers include people and firms already exposed publicly. U.S. Atty. Rudolph W. Giuliani, whose office prosecuted the trader, declined to comment.
Among those known to have been implicated by Boesky are former investment banker Martin A. Siegel and former Los Angeles stockbroker Boyd L. Jefferies. Both pleaded guilty this year to felony violations of securities laws and have aided further investigations.
Helped in Takeover Probe
Boesky also helped investigators unravel illegalities in the takeover campaign in Britain of Guinness PLC for Distillers Co., which has developed into the largest insider trading case to be exposed in that country. U.S. investigators say the SEC is investigating "dozens" of individuals implicated by Boesky.
Some investigations reportedly center on the activities of the securities firm Drexel Burnham Lambert and its head of "junk bond" trading, Michael Milken. Boesky was a Drexel client, but no charges against the firm or Milken have been filed in the 13 months since Boesky was brought down.
Formerly one of Wall Street's most self-possessed grandees, Boesky arrived for his sentencing shortly after 9 a.m. He emerged from a black limousine at the front entrance of the federal courthouse into a phalanx of six private security men. Once inside the building he was escorted by U.S. marshals to the third floor and walked into the courtroom between two lawyers just before Lasker took the bench.
Grim-faced as ever but without the frosty smile it was once his custom to flash, Boesky sat motionless in his midnight blue suit, flanked by lawyers, while prosecutor John Carroll and defense counsel Silverman made final pre-sentencing statements.
Refers to Earlier Remarks