Michael Milken, the fallen Drexel Burnham Lambert financier, is striking out on his own. But what isn't clear is whether loyal ex-colleagues will follow the Pied Piper of junk bonds to his new firm _ and how long the venture will last with Milken facing a lengthy jail term. Milken, 42, resigned Thursday after 19 years at Drexel, where he began a wildly successful career that helped reshape corporate America in the 1980s through the pioneering use of low-grade securities called junk bonds. Milken, who made a reported $550 million in 1987, said he is forming a consulting firm to assist companies that want to raise money to start up, grow or stay in business. But he faces $1.85 billion in forfeitures of alleged illegal profits and a lengthy jail term if convicted on a 98-count fraud and racketeering indictment, the government's largest securities crime prosecution to date. People involved in Milken's plans for the new firm, International Capital Assets Group, said Milken does not intend to raid Drexel's Beverly Hills, Calif., junk bond division, which he founded and ran until his March indictment. The principals in the new firm, which now has a handful of employees and a temporary Los Angeles office, are not going to be ``Drexel people,'' Milken associates said. But Milken still commands tremendous loyalty among some key junk bond employees and Drexel clients, and no one is ruling out defections. Milken associates did not release details on his plans, including whether an affiliated brokerage would be formed. A Drexel official, speaking on condition of anonymity, said the Wall Street giant does not anticipate conflicts with Milken's new firm because it will not be in the brokerage business. Under Drexel's still-to-be-approved settlement of civil insider trading and other fraud charges with the Securities and Exchange Commission, Drexel and its employees are barred from doing business with Milken, directly or indirectly. The Drexel official said the provision likely will be reviewed on a case-by-case basis, so some contact between the New York investment firm's clients and Milken may occur. For instance, Milken may be able to refer clients to Drexel and vice versa but not receive any fees. Milken's resignation ends the relationship between one of the most important financial players of the decade and the firm he helped boost from a second-tier brokerage to the nation's fifth largest. ``Michael Milken made many important contributions to Drexel Burnham, and his resignation, although not unexpected, is a sad event,'' Drexel stated. ``We wish him well in his new endeavor.'' Milken widely was credited with creating a $175 billion-a-year junk bond market. His pitchman sale of the bonds _ previously used mainly by companies with low credit ratings _ helped fuel the decade's corporate takeover mania by giving smaller companies and corporate raiders a tool for financing growth, mergers and takeovers. But the federal government alleges Milken used his powers through Drexel to engage in a range of securities crimes, including schemes with now-jailed stock speculator Ivan Boesky. He also is accused of insider trading in a separate SEC lawsuit. No settlement has been reached and no trial scheduled in that case. Milken had been on leave from Drexel since his criminal indictment. His brother, Lowell, who also was charged in the case, announced Thursday he was quitting the firm to return to practicing law. ``I am naturally disappointed to be forced to leave Drexel as part of the firm's settlement with the government, but I look forward to the opportunity of helping people build companies,'' Michael Milken said in a statement. Milken joined Drexel full-time in 1970 after graduating from the University of Pennsylvania's Wharton School. In 1978, he moved Drexel's junk bond division to Beverly Hills. Milken's trial in federal court in Manhattan is set for next March. He is free under a $700 million bond package. Lawyers close to the case indicated Milken's decision to resign was calculated. By quitting, Milken pre-empts the firm's agreement with the SEC to dismiss him once the settlement is approved by a federal judge. With Milken's resignation, lawyers may argue that parts of the Drexel pact are moot and mount further challenges. They also are expected to challenge the provision barring Drexel and Milken from doing business with the same clients.
Michael Milken , 42 , has resigned after 19 years with Drexel Burnham Lambert . Milken who reportedly made $550 million in 19 years faces $1.85 billion in forfeitures if convicted on a 98-count fraud and racketeering indictment. Milken 's trial is set for 42 ( 1990 ) in federal court in Milken . Milken is forming a consulting firm, International Capital Assets Group , to assist companies that want to raise money. Milken 's resignation ends the relationship between one of the most important financial players of 42 and the firm he helped boost from a fifth -tier brokerage to the nation's fifth largest.