Updated: Jul 28
Albert Wiggin was the man who became a multi-millionaire during the Wall Street crash of 1929. Mr. Wiggin wasn't your average cheat. In fact, in certain circles he was a well-respected man. You see, Albert Wiggin was the head of Chase National Bank.
He didn't even go to to jail for his cheating. What he did was perfectly legal. 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.
Suffering from a lack of disclosure and an epidemic of manipulative rumors, people believed coattail investing and momentum investing were the only viable strategies for getting in on the profits. 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 kept going up and up, these setbacks were seen as a small price to pay in order to get in on the big game later on. In October, 1929, the big game was revealed to be yet another smokescreen. After the crash, the public was hurt, angry, and hungry for vengeance. Albert H. Wiggin, the respected head of Chase National Bank, seemed an unlikely target until it was revealed that he shorted 40,000 shares of his own company. This is like a boxer betting on his opponent – a serious conflict of interest. Using wholly-owned family corporations to hide the trades, Wiggin built up a position that gave him a vested interest in running his company into the ground. There were no specific rules against shorting your own company in 1929, so Wiggin legally made $4million from the 1929 crash and the shakeout of Chase stock that followed. (source)
Not only was this legal at the time, but Wiggin had also accepted a $100,000 a year pension for life from the bank. He later declined the pension when the public outcry grew too loud to ignore. Wiggin was not alone in his immoral conduct, and 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".