Business : Drexel’s Junk Bond Whiz Milken to Leave Firm in Deal With U.S.
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NEW YORK — Michael Milken, the head of Drexel Burnham Lambert Inc.’s junk bond department, is to leave the company as part of an agreement between Drexel and federal prosecutors, according to court documents released today.
Milken, who has headed Drexel’s high-yield securities department in Beverly Hills, is credited with virtually inventing the market in junk bonds, securities that offer high returns but higher risk than investment-grade bonds.
The disclosure came in court documents that are part of Drexel’s agreement to plead guilty to six felonies and pay a record $650 million. The documents were unsealed at the U.S. District Court in Manhattan.
Sources close to the talks between Drexel and the government said Milken’s ouster from the company was one of the conditions being demanded by the government. A source close to the investigation earlier told Reuters that Milken will be indicted on criminal charges this week.
As part of the agreement, Milken, 42, will leave without pay, including a multimillion-dollar bonus for work done in 1988.
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