Friday, March 2, 2007

Wall Street

In an article published in the Wall Street Journal (here), Daniel Henninger wrote:

Thirty years ago on Wall Street, Salim "Sandy" Lewis was a household name. His father Salim co-built Bear Stearns, and he in turn made his reputation in the high-stakes corporate-merger cycle of the 1980s. He worked without legal or disciplinary taint until he was 49. In 1986 a federal prosecutor named Rudolph Giuliani indicted him for securities violations.

His accuser was Boyd Jeffries, the criminal acolyte of famed financial criminal Ivan Boesky. The case itself was arcane. Outraged at a short-selling practice legal at the time, Mr. Lewis urged Jeffries to engage in a stock transaction to thwart the short sellers. A subsequent court called what he did "an act of market vigilantism, in which Mr. Lewis in no way personally profited." And indeed the short-selling practice he attacked was later outlawed. Still, his own act was illegal.

Rudy Giuliani indicted him on 22 counts. He pleaded guilty to three, facing 15 years. Judge Mary Johnson Lowe reduced it to three years probation, an act of now-antique proportionality. The SEC got an injunction banning Mr. Lewis for life from the securities business; this was the core of a reputation the court record had shown steeped in good works. He sought to restore it.

In 2001, he received a pardon from President Clinton (later called "a bona fide pardon on the merits" by a federal judge). The SEC bar order remained. He again sought relief in court, and this past summer Judge William Conner of the Southern District (aka Wall Street) lifted the lifetime bar, saying "we cannot ignore the inequity inherent in the injunction." It took only 20 years.

This blog posted two entries referring to Mr. Lewis, and they have been removed.  We apologize for any misstatements in them. (ph)

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