Drexel Tells Staff to Avoid Business Deals With Milken

The investment firm Drexel Burnham Lambert Inc. warned its employees this week to avoid business contact with Michael Milken, the financier who turned Drexel into one of the most profitable firms on Wall Street.

As part of its settlement of sweeping fraud charges with the Securities and Exchange Commission earlier this year, Drexel agreed to dismiss Michael Milken and his brother, Lowell, and to sever business relationships with them. But the Milkens, who are the targets of pending criminal and SEC charges, were not party to that agreement and have asserted their innocence.

Meanwhile, Michael Milken--who headed Drexel's high-yield junk bond operations--has launched his own firm and is advising some companies on financial strategy, which is one of the factors that led to the warning this week. Under the terms of the SEC agreement, Drexel employees have been informed that they are not allowed to advise corporate clients if Milken is also advising them.