Albert H Wiggin is the picture of an old-time banker. So much so that his face would fit nicely on the Monopoly box. His first break into banking came in June 1899 when he took vice president’s position at the National Park Bank in New York City. He became the bank’s president only 12 years later.
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During the Roaring ’20s, many Wall Street professionals, and even some of the general public, knew Wall Street was a rigged game run by powerful investing pools. People believed coattail investing and momentum investing were the only viable strategies for getting in on the profits. They suffered from a lack of disclosure and an epidemic of manipulative rumors. Unfortunately, many investors found that the coattails they were riding were actually smokescreens for hidden sell orders that left them holding the bag. Still, while the market continued going up and up, many saw these setbacks as a small price to pay to get in on the big game later. In October of 1929, it became obvious that the big game was yet another smokescreen.
Albert H Wiggin After The Crash
After the crash, the public was suffering, angry, and hungry for vengeance. Albert H Wiggin was the respected head of Chase National Bank and seemed an unlikely target. Until they found out that he shorted 40,000 shares of his own company. This is like a boxer betting on his opponent—a serious conflict of interest.
Wiggin built up a position that gave him a vested interest in running his company into the ground. He used wholly-owned family corporations to hide the trades. There were no specific rules against shorting your own company in 1929. Albert H Wiggin legally made $4 million from the 1929 crash and the shakeout of Chase stock that followed.
Not only was this legal at the time, but he had also accepted a $100,000 a year pension for life from the bank. However, he later declined the pension when the public outcry grew too loud to ignore. Albert H Wiggin was not alone in his immoral conduct. Similar revelations led to a 1934 revision of the 1933 Securities Act that was much sterner toward insider trading. It was appropriately nicknamed the “Wiggin Act.”