Boesky pled guilty in the fall of 1986 and Milken was under investigation by the summer of 1987. And they were both big Democrats (one of Milken's biggest "fans" was Jesse Jackson).
Boesky was indicted in 1984 or 1985, I believe. I personally worked on nearly half a dozen Drexel deals in 1988 alone, and although Drexel had to put language in its disclosure documents reporting that the SEC was looking at it this did not stop the company from doing its deals. The 1987 market crash had no effect on its activities, as far as I know.