Bad Trades

By John Greenwald

INSIDE OUT: AN INSIDER'S ACCOUNT OF WALL STREET by Dennis B. Levine with William Hoffer

Putnam; 431 pages; $22.95

If any skeptics still doubt that the 1980s were an era of mindless greed on Wall Street, Dennis Levine's account of his rise and fall as an inside trader should set them straight. Levine, a megadeal meister for the now bankrupt Wall Street firm Drexel Burnham Lambert, raked in more than $10 million through the simple expedient of buying and selling stock with the help of inside tips. Arrested in 1986 and jailed for 17 months in a minimum-security prison, he led prosecutors to arbitrager Ivan Boesky, who, in turn, helped them reel in the biggest fish of all -- junk-bond king Michael Milken. Now permanently barred from the securities industry, Levine, 39, makes his living as a consultant to companies engaged in mergers and other deals.

Levine still seems astonished at how easy it was to get rich the ill-gotten way. All it took, he notes in flat but serviceable prose, was a tight ring of conspirators whose Wall Street jobs yielded confidential information about upcoming takeovers and other corporate news. Once armed with a tip, Levine dashed for the nearest pay phone to dictate orders to buy and sell stock to the manager of his secret Bahamas bank account. (When one offshore bank balked at carrying out such orders, Levine picked another out of the Nassau phone book.) "My God," he told himself after one spectacularly profitable purchase, "this is so easy."

The money flowed so freely that Levine kept breaking the law even after his legitimate yearly income rocketed to $2 million. That was not enough at a time when other Masters of the Universe made still bigger bucks and Milken earned an astronomical $550 million in a single year. Blinded by greed, Levine rationalized his crimes by asserting that everyone traded on inside information and assuring himself that he would never get caught. Unknown to him, however, his Bahamas bankers were copying his trades for themselves. Their profligate piggybacking left an international paper trail that led U.S. regulators straight to Levine.

While he takes blame for his flagrant misdeeds, Levine considers himself to have been "an insider-trading junkie" who simply could not stop. "I was addicted to the excitement, the sense of victory," he writes. "Some spouses use drugs, others have extramarital affairs. I secretly traded stocks." That may be true, but an errant spouse does not bring disrepute to an entire industry.