Which investment bank collapsed in 1990 after the junk-bond scandal involving Michael Milken?

Drexel Burnham Lambert collapsed in 1990 after the junk-bond scandal involving Michael Milken.

The investment bank became the leading force in the market for high-yield, below-investment-grade bonds, commonly called junk bonds. Its products helped finance corporate takeovers and leveraged buyouts during the 1980s, making the firm one of Wall Street’s most powerful institutions.

Michael Milken, Drexel’s prominent bond trader, was indicted in 1989 on securities and mail-fraud charges. He later pleaded guilty to six felony counts and was sentenced in 1990. The legal pressure, reputational damage, and loss of business severely weakened Drexel.

Drexel Burnham Lambert filed for bankruptcy in February 1990. The episode is often associated with the broader 1980s takeover boom, although junk bonds themselves were not illegal. Drexel’s collapse is also distinct from the later failures of Lehman Brothers and Bear Stearns, which were linked primarily to the 2007–08 financial crisis rather than the Milken-era junk-bond investigations.