INSIDE DENNIS LEVINE He was a formidable operator who had his insider-trading ring planned when he was all of 27.
By TERRY TEACHOUT TERRY TEACHOUT is a member of the editorial board of the New York Daily News.

(FORTUNE Magazine) – Most investors who trade on inside information do not get caught. Dennis Levine did get caught, and by the time he was through fingering his allies and accomplices, a sizable number of Americans had come to believe the country was in a new era of greed. Douglas Frantz, a financial reporter for the Los Angeles Times, pretty much accepts that judgment in his wonderfully absorbing Levine & Co.: Wall Street's Insider Trading Scandal (Holt, $19.95). What makes the book absorbing, however, is not the author's views about the deeper meaning of the scandal. Levine & Co. succeeds mainly because its protagonist turns out to be a far more interesting and formidable figure than the press reports led us to think. His early years are wrapped up in 20 pages. Dad sold aluminum siding in the New York City area. Mom was short and plump. None of the Levines had ever been to college. Dennis, the youngest of three sons, hung out with a rough crowd, rode a motorcycle, helped with the family business. Then something clicked. Two years after graduating from high school, Dennis enrolled at Bernard Baruch College, a branch of the City University of New York devoted to business and accounting. Fifteen thousand students. Lots of ambitious, unfinished young guns from the wrong side of the tracks. Dennis Levine looked around, took a deep breath, and got religion. ''Greed is a nice religion,'' Jack Francis, an economics professor at Bernard Baruch, told Levine, his hungriest pupil. ''If you are really greedy, you are going to keep your shoes polished, you won't run around on your wife or get drunk. You will do whatever it takes to maximize your lifetime income, and that doesn't leave time for messing up.'' Dennis Levine seems to have taken this advice quite seriously -- and plainly needed all the advice he could get. A Jewish kid from Queens with a degree from a lower-middle-class college and no shortage of rough edges, he had trouble landing interviews at the elite investment banks where he wanted so desperately to work. It didn't matter. ''I'm going to be a millionaire by the time I'm 30,'' he told another professor. All he needed was one break, and when it finally came, nine long months after Levine got his MBA from Baruch, he jumped at it. Though the job, a $365- a-week management training position in Citibank's corporate foreign exchange department, wasn't anything to write home about, Levine buffed his nails and generally paid attention. After a while, he got a shot at a better berth in the corporate finance department at Smith Barney Harris Upham & Co. THE FIRM, FRANTZ TELLS US, ''still had a reputation as a conservative, strait-laced Gentile house.'' But times were tough, and so the partners decided to bring in some fresh talent to spice up the merger and acquisition division. ''He is very self-assured but pleasant,'' one partner wrote of Dennis Levine in a memorandum, adding tactfully: ''He represents diversification of our personnel.'' Smith Barney ended up hiring Levine away from Citibank in 1978 for $23,000 a year. Two years later he was transformed. Although still earning less than $30,000, he exuded power and authority. What's more, he had already -- at age 27 -- conceived the idea of establishing a vast insider-trading network, with himself at the center. The network he had in mind would receive tips from a variety of sources, so that the SEC could not easily link him to any one law firm or brokerage house. He was already planning to run his trades through secret overseas bank accounts and had opened an account at Pictet & Cie in Geneva. And he was already recruiting allies who could count on getting plenty of inside information -- a young associate at Lazard Freres, another at the Wachtell Lipton law firm. Robert Wilkis, his friend at Lazard, was frightened by the basic proposition and proved difficult to recruit. ''You gotta do it,'' Levine argued. ''Everybody else is. Insider trading is part of the business. It's no different from working in a department store. You get a discount on clothes you buy. You work at a deli. You take home pastrami every night for free. It's the same thing as information on Wall Street.'' DENNIS LEVINE was so hungry that his trading eventually set off alarm bells at Pictet & Cie, which became suspicious and asked him to close his account. Soon afterward, he flew down to the Bahamas, walked into the offices of Swiss- owned Bank Leu International Ltd., and volunteered himself as a customer. Jean-Pierre Fraysse, general manager of Bank Leu's Nassau subsidiary, wrote a memo sizing up Levine as follows: ''He is basically only interested in the U.S. market, which he knows extremely well. He will give us his instructions by telephone on a collect-call basis. He appeared to be obsessed by security and does not wish to receive any communication from us in a written or oral form.'' Bank Leu seems to have regarded these arrangements as perfectly reasonable (a detail that, all by itself, says a lot about the prevalence of insider trading). The bank opened an account for Levine on the spot, and the rest is history. ''Over nearly six years of trading at Bank Leu,'' Frantz writes, ''Levine bought as much as 150,000 shares of stock in a single company. He invested as much as $9 million in a single deal. He bought $99.3 million worth of stock in 114 different companies. He sold that stock for a total of $110.8 million. He picked 71 winners and made $13.6 million profit on them.'' By the time he was 33, Dennis Levine was a managing director at Drexel Burnham Lambert, owned a red Ferrari and an apartment on Park Avenue, and could boast of collaborating with Ivan Boesky (code name: ''the Russian'') on insider trades. An interesting question about Levine is whether he was caught because his scheme was fatally flawed -- or because he was just unlucky. Frantz nowhere addresses the question squarely, but you come away from his account wondering about the viability of any illegal scheme involving so many different participants in such a long and tangled trail of transactions. Levine was ultimately undone because of events he could never have foreseen. Bank Leu used a Merrill Lynch broker to execute some of his trades. The broker eventually noticed that an awful lot of the trades were successfully anticipating merger news. The broker thereupon began to ''mimic'' the Bank Leu orders in trading for his own account, and he also mentioned his thoughts about Bank Leu to one of his colleagues in Merrill Lynch's Caracas office. When this colleague and another broker in Caracas also began to mimic the trades, somebody else who had observed them sent an anonymous note to Merrill's compliance department in New York. The note, which accused the two of trading on inside information, was passed on to the SEC. The commission never charged them, but its investigation ended up unraveling the insider- trading ring. WHEN THE SEC finally caught up with him in the summer of 1986, Levine managed to cut one last deal. He rolled over with a vengeance, testifying against everyone in sight in return for a modest prison sentence (two years behind bars); the arrangement also included a fine of $362,000, forfeiture of all the illegal profits, and an injunction barring him from the securities business for the rest of his life. He lost the Ferrari but managed to hang on to the Park Avenue apartment. ''I have disappointed my wife, my children, my father, my brothers, my family, my friends, my colleagues,'' he told the judge who sentenced him. ''I abused the system I believe in and I will never forgive myself.'' Right up to here, Levine & Co. is a solid reporting job. Dennis Levine may not have talked to Douglas Frantz, but some other members of the ring plainly did, and the Freedom of Information Act put thousands of pages of relevant documents into his hands. But when Frantz tries to explain it all in his concluding chapter, ''The Morning After,'' he can't seem to get beyond that familiar sermon about the importance of business ethics. I suspect that a lot of readers of Levine & Co. will skip the sermon, and still feel that they got their money's worth.