This Day in Wall Street History 1988: Drexel Burnham pleads guilty to securities fraud

Call it just another day on Wall Street during the scandal-ridden 1980s. This time, the culprit was the once-high-flying junk bond firm, Drexel Burnham Lambert Inc., which pleaded guilty to charges of mail, wire and securities fraud.

As part of the settlement, Drexel agreed to hand over a record $650 million in fines, as well as to cooperate with authorities in their ongoing investigation of other Wall Street figures.

Drexel, in fact, helped snare one of its own fallen stars, Michael Milken, as the firm provided evidence that helped mount a damning case against the deposed junk-bond king.

Thanks to his former firm, Milken was indicted in 1990 on nearly 100 counts of racketeering. Nor was the outcome of the scandal particularly kind to Drexel.

Indeed, the firm's finances had already been hit hard by the waning junk bond market of the late '80s; the mammoth fraud settlement further depleted their rather-barren coffers. In February 1990, Drexel filed for Chapter 11.

Source: History.com