Which American investment bank filed for bankruptcy in 1990 after the collapse of the junk-bond market?

Drexel Burnham Lambert filed for bankruptcy in 1990 after the collapse of the junk-bond market.

Drexel was a major investment bank and a leading force in the development of high-yield corporate bonds. Under financier Michael Milken, it helped finance leveraged buyouts and corporate takeovers during the 1980s.

The firm’s reputation and finances deteriorated after investigations into securities violations and market manipulation. Michael Milken pleaded guilty to securities and mail-fraud charges in 1990. Drexel filed for Chapter 11 on February 13, 1990, and later liquidated.

The bankruptcy is often associated only with junk bonds, but the collapse also reflected legal pressure, shrinking deal activity, and the firm’s loss of access to capital. It preceded the much larger investment-bank failures of the 2008 financial crisis.