Martin Siegel meets Ivan Boesky at the Harvard Club in New York City to discuss his mounting financial pressures. Arbitrageur Boesky offered Siegel, a mergers-and-acquisitions executive at Kidder, Peabody & Co., a job, but Siegel, who was looking for some kind of consulting arrangement, declined. Boesky then suggested that if Siegel would supply him with early inside information on upcoming mergers there would be something in it for him.
In January 1983, although little information had been exchanged, Boesky sent a courier with a secret code and a briefcase containing $150,000 in $100 bills to be delivered to Siegel at the Plaza Hotel.
Over the next couple of years, Siegel passed inside information to Boesky on several occasions. With Siegel's inside tips, Boesky made $28 million dollars investing in Carnation stock before its takeover. But his success began to fuel investigative inquiries by both the press and the Securities and Exchange Commission. Rumors that Siegel and Kidder, Peabody & Co. were involved in illegal activities began floating around.
Despite the pressure, Siegel and Boesky met at a deli in January 1985, where Siegel demanded $400,000. This time, the cash drop-off was made at a phone booth. Siegel, who was apprehensive about his relationship with Boesky, decided to put an end to it after he had received his money. Still, he continued to trade inside information with other Wall Street executives.
In 1986, the illegal schemes, which by then included many of the biggest traders in the country, came crashing down. Arrests were made up and down Wall Street, and Boesky and Michael Milken, the junk bond king charged with violating federal securities laws, were no exception.
Siegel turned out to be one of the few cooperative witnesses for the government and virtually the only one who showed remorse for his role in the fraud, causing him to be ostracized on Wall Street. Nevertheless, he did fare better than the others: Milken received a 10-year sentence and Boesky received 3 years, but Siegel was only required to return the $9 million he had obtained illegally. The entire incident came to symbolize the era of unfettered greed on Wall Street in the mid-1980s.