In fulfillment of the requirements for the subject

FORENSIC ACCOUNTING

RESEARCH
CASE 1 : IVAN BOESKY

Submitted to:

Submitted by:
CASE 1: IVAN BOESKY

I. Summary of the Case

The US Securities and Exchange Commission vs. Ivan F. Boesky case is an insider trading
case. The case that began with a tip to the enforcement staff about the insider trading of
Dennis B. Levine, an investment banker at the Wall Street firm Drexel Burnham Lambert.
Levine plead guilty and cooperates with SEC investigations that led to an even bigger case
involving Ivan Frederick Boesky.

The complaint alleges that Boesky traded stocks of at least seven companies while in
possession of material non-public information that was provided to him by Levine. On the
basis of those non-public information, Boesky often makes significant trades few days
before the takeover is announce publicly. The complaint further states that Boesky agreed
to pay Levine five percent of his profits in the transactions where Boesky based his decision
to purchase the stocks on the non-public information provided by Levine. A lesser amount
of one percent, if Boesky decided to continue to hold or increase his holdings in the stocks
based on such information. The non-public information concerned tender offers, mergers
or other business combinations that Levine received from Robert M. Wilkis, an investment
banker at Lazard Freres & Co. and from Ira B. Sokolow, an investment banker at Lehman
Brothers Kuhn Loeb Incorporated. According to the government, Boesky made roughly
$50 million in profits in his insider trading scheme with Levine.

In November 1986, Boesky pleaded guilty to one felony count of manipulating securities
and agreed to be a government witness as part of his plea bargain. In return for leniency,
Boesky cooperated with the authorities that led to various corporate insiders and takeover
specialists, including junk-bond trader Michael Milken and his firm, Drexel Burnham
Lambert. As a result of his plea agreement and cooperation, Boesky received a sentence of
three and one-half years in prison, a $100 million fine, and a permanent ban from working
in the securities industry.

II. Role of Forensic Accountant

It was forensic accounting that helped the US SEC make the case against Ivan Boesky and
Company for insider trading. Forensic accountants apply special skills in accounting,
 auditing, finance, quantitative methods, certain areas of the law, research and investigative
skills to collect, analyze and evaluate evidential matter and to interpret and communicate
findings.

The forensic accountant’s role in the investigation is to collect, maintain, preserve and
review any evidence which prove the allegations, established its connection with the
perpetrators, measure the financial impact of the fraud and turn that information over to the
appropriate legal entity who will actually prosecute.

III. Resolution

Forensic accounting played a vital part in discovering and proving the relation of
perpetrators and measuring the financial impact of the fraud. The forensic accountants are
key people in any fraud investigation since they understand accounting systems and
internal controls, and know how to trace the flow of funds. As experts assisting in case
investigations, the forensic accountant must be knowledgeable with court proceedings,
rules of evidence and how to quantify damages arising out of a particular situation. A good
forensic accountant must also be knowledgeable about fraudulent practices both in general
and within specific industry because some industries, such as insurance, banking and
trading securities, are especially prone to fraud activities.

IV. References
1. https://en.wikipedia.org/wiki/Ivan_Boesky
2. https://www.investopedia.com/terms/i/ivan-boesky.asp
3. https://www.britannica.com/biography/Ivan-Boesky
4. https://www.cnbc.com/2020/11/28/who-is-ivan-boesky.html
5. https://www.encyclopedia.com/law/encyclopedias-almanacs-transcripts-and-
maps/boesky-ivan
6. https://www.sechistorical.org/museum/galleries/wwr/wwr05a-markets-boesky.php
7. https://www.sec.gov/news/speech/1986/112086cox.pdf
8. https://www.investopedia.com/ask/answers/what-is-arbitrage/
9. https://law.justia.com/cases/federal/district-courts/FSupp/825/623/1412722/
10. https://apnews.com/article/8a1aafe3fd68cb551eac5313497ad7b2