Bayside, Queens, New York
|Criminal charge||Securities fraud (insider trading), tax evasion, perjury|
|Criminal penalty||Two years in federal prison, $362,000 fine, $11.5 million disgorgement, lifetime ban from securities industry|
|Criminal status||Released in 1988|
|Conviction(s)||June 5, 1986 (pleaded guilty)|
Dennis B. Levine (born August 1952) was a prominent player in merger and acquisition business and the Wall Street insider trading scandals of the mid-1980s. As a managing director at Drexel Burnham Lambert, he was at the center of the frenetic 1980s merger and acquisition boom. His career on Wall Street ended with his indictment for insider trading, making him one of the first of several high-profile insider trading defendants indicted by U. S. Attorney Rudy Giuliani.
After a brief stint at Citibank, he joined Smith Barney in 1978, moving to Lehman Brothers in 1981. Shortly after Lehman was bought by American Express in 1985, he moved to Drexel as a managing director.
Levine spent most of his career as a specialist in mergers and acquisitions. He was known as a good researcher with a voracious appetite for information. He soon became a major player in the M&A field, and played key role in two of the more notable hostile takeovers of the 1980s—James Goldsmith's takeover of Crown Zellerbach and Ron Perelman's takeover of Revlon. It was very common to see him on a telephone with an extra-long cord while hunched over a Quotron, checking out signs of possible deals.
After completing his sentence and making full restitution, Levine returned to the finance world as president of ADASAR Group, a financial consulting firm. Over the last 25+ years, Levine has reemerged as a global strategist for innovative technology trends, most recently focusing on controlled environment agriculture and sustainability, including food, water and energy systems. He also lectures throughout the world at universities and organizations on a host of contemporary issues from business ethics to emerging technology developments. 
Over the years, Levine built up a network of professionals at various Wall Street firms who engaged in insider trading. Participants exchanged and traded on inside information they obtained through their work. Levine placed his trades through an account maintained at Bahamian subsidiaries of Swiss banks. After briefly doing business with Pictet & Cie, he moved his business to Bank Leu in May, 1980, eventually earning $10.6 million in profits. Levine believed he was safe from detection. Like most Swiss banks, Bank Leu had a long tradition of secrecy. Also, the Bahamas had some of the strictest bank secrecy laws in the world; they forbade banks from disclosing any information about a customer's banking relationship to a third party.
Bank Leu officials soon realized that Levine was trading almost entirely on inside information. In order to get a piece of the action for themselves, some of them copied, or "piggybacked," his trades for their own accounts. In the process, they made a tidy profit on Levine's trades. To cover the trail, they broke up Levine's trades among several brokers. Unfortunately for Levine, they steered a large number of his trades through a broker at Merrill Lynch, who began piggybacking the trades for himself.
In May 1985, Merrill Lynch detected suspicious activity in two other brokers' personal trading accounts. An internal investigation led to Bank Leu. Unable to pierce the veil of secrecy, Merrill Lynch forwarded the affair to the U.S. Securities and Exchange Commission (SEC). Bank officials suggested that Levine come up with reasons to justify the trades. However, they also forged or destroyed many documents related to Levine's activity—thus opening themselves to charges of obstruction of justice. Their story fell apart when noted attorney Harvey Pitt, whom the bank had retained, noticed a huge gap between the actual statements of the bank's managed accounts and the omnibus records. At that point, the bank decided to cooperate with the SEC.
Bahamian Attorney General Paul Adderly issued an opinion that stock trading was separate from banking. Therefore, since Bank Leu didn't have a "banking relationship" with Levine, any disclosure about him would not violate Bahamian banking law. The bank was thus free to reveal Levine's name, and he was arrested soon afterward. At the same time, he was sued by the SEC.
On June 5, 1986, Levine pleaded guilty to securities fraud, tax evasion and perjury. He also agreed to cooperate with the government and revealed the other members of his insider trading ring. Levine also settled the SEC's charges, agreeing to disgorge $11.5 million—at the time, the largest such penalty in SEC history. He also agreed to a lifetime ban from the securities industry. Levine also agreed to pay $2 million in back taxes out of the amount he disgorged to the SEC.
As Levine's arrest was unfolding his employer, Drexel Burnham Lambert were in the process of distributing their annual report which included a picture of Dennis Levine amongst other executives in the report. Copies of this original version of the annual report were recollected to the extent possible and it was replaced with a new annual report that did not include the picture of Dennis Levine.
Subsequently, Levine directly implicated powerful arbitrageur Ivan Boesky, and information from the Boesky case also implicated another prominent player in the mergers and acquisitions circle, Martin Siegel. Both Boesky and Siegel subsequently pleaded guilty. Due in part to this cooperation, federal judge Gerald Goettel imposed a lenient sentence of two years in prison and a $362,000 fine. However, since Levine had been stripped of nearly all of his liquid assets by the SEC and IRS, Goettel did not "commit" the fines, meaning that he would not be held in contempt of court if he left prison without paying them. At sentencing, Goettel said that Levine had helped expose "a nest of vipers on Wall Street."
In 1991, Levine wrote a book about his experiences, Inside Out—an Insiders Account of Wall Street. He accepted full responsibility for his actions and claimed the vast majority of professionals on Wall Street followed the rules. In his lectures to students since then, he acknowledges his mistakes, stresses the importance of ethical standards to young professionals through his real-life experiences and has heightened awareness for ethical education programs at universities. He said that after his arrest, he seriously considered fighting the charges, claiming that the government circumvented Bahamian law in order to obtain most of the evidence against him. However, he said, the possibility of additional charges in a superseding indictment—possibly including the powerful Racketeer Influenced and Corrupt Organizations Act—and concern about the effects on his family led him to conclude that this was a battle he could not win.
The SEC and the US Attorney's office conducted investigations that soon extended well beyond Levine's insider trading ring. There seemed to be an entire web of relationships among Wall Street professionals exchanging information and other favors, including the parking of stock, the accumulation of stock to pressure a firms' management, and stock price manipulation, all unrelated to Levine. Well known market participants were soon caught up in the investigations, including Siegel, Boesky and arbitrageur Robert Freeman. The investigations also led to Michael Milken, who was highly influential in the junk bond market at the time.
- Stone, Michael (July 28, 1986). "Insiders: The Story of Dennis Levine and the Scandal That's Rocking Wall Street". New York Magazine: 26–34.
- "Greed on Wall Street". Newsweek. 1986-05-26. Retrieved 2007-08-22.[dead link]
- Fechter, Melvin Through the Eye of a Jew - Volume II September 20, 2013
- Stewart, James B. (1991). Den of Thieves. New York: Simon & Schuster. ISBN 0-671-63802-5.
- Levine, Dennis & Hofer, William (1991). Inside Out. New York: G.P. Putnam's Sons. ISBN 0-399-13655-X.
- Hiltzik, Michael A. Levine Guilty of fraud, perjury and tax evasion. Los Angeles Times, 1986-06-06.
- Widder, Pat. Inside trader gets 2 years, $360,000 fine. Chicago Tribune, 1987-02-21.