A:

This dubious honor belongs to Michael J. Meehan. Meehan was a stock market manipulator who operated in the stock pools that allegedly contributed to the 1929 Crash. While the economy was suffering during the Great Depression, the ice cream company that Meehan has purchased, Good Humor, was paying large healthy dividends. Prior to his investment with the company, Michael was a Wall Street stock trader.

In 1935, Meehan began to buy and sell Bellanca Aircraft stock to artifically inflate trading volumes and catch the interest of investors. This strategy, matched orders, creates the illusion of heavy volume when the buyers and sellers identities are unknown. Investors flocked to Bellanca Aircraft and bought in at inflated prices as Meehan was selling his way out.

Unfortunately for Meehan, just a year earlier the Securities and Exchange Act of 1934 made matched orders illegal. Meehan was banished from Wall Street and served as an example for many former manipulators. In 1929, Meehan's actions were not only legal, but were regarded as regular business at the time. But by 1935, the times had moved on and Meehan did not stop in these activities.

So it is that Meehan, a stock market manipulator, is remembered as the first person charged by the SEC, whereas his potential compatriot Joseph Kennedy is remembered as the first chairman of the SEC and the father of a political dynasty. It's hard to tell if the fates really are fickle, or just suffer from a unique sense of humor.

For more historical examples of Wall Street fraud, check out Tales from Wall Street's Crypt.

This question was answered by Andrew Beattie.

RELATED FAQS
  1. How do investors lose money when the stock market crashes?

    Over the last hundred years, there have been several large stock market crashes that have plagued the American financial ... Read Answer >>
  2. Do traders, market makers, specialists or others ever deliberately drive a stock's ...

    Many individual investors have had the experience of closing their position in a stock only to see the price rebound moments ... Read Answer >>
  3. What caused the stock market crash of 1929 that preceded The Great Depression?

    Find out what led to the stock market crash of 1929, which in turn led to the Great Depression. It sparked a nearly 90% loss ... Read Answer >>
  4. Where did the term "tenbagger" originate?

    On February 15, 1989, Peter Lynch's investing book, "One Up On Wall Street", made its debut. At the core of the book was ... Read Answer >>
  5. What are some examples of diminishing marginal benefits in my personal spending?

    Learn what a marginal benefit is, why it diminishes, and read about two examples where a consumer can experience diminishing ... Read Answer >>
Related Articles
  1. Small Business

    Why Wall Street Is A Key Player In The World's Economy

    Wall Street is just one little street in lower Manhattan, but both empirically and symbolically, it continues to make the world go round.
  2. Insights

    The SEC: A Brief History Of Regulation

    The SEC has continued to make the market a safer place and to learn from and adapt to new scandals and crises.
  3. Investing

    The Short and Distort: Stock Manipulation in a Bear Market

    High-quality stock reports needn't be confused with stock manipulators' dramatic claims.
  4. Small Business

    4 History-Making Wall Street Crooks

    Find out how these Wall Street high-rollers landed themselves in hot water.
  5. Investing

    Financial Statement Manipulation An Ever-Present Problem For Investors

    The SEC has taken steps to eliminate this type of corporate fraud, but it remains a real risk for investors.
  6. Investing

    The Pioneers Of Financial Fraud

    These fraudsters were the first to commit fraud, participate in insider trading and manipulate stocks.
  7. Insights

    Understanding the SEC

    The SEC's triple mandate of investor protection, maintenance of orderly markets and facilitation of capital formation makes it a vital player in capital markets.
  8. Investing

    How Financial Statements Are Manipulated

    Financial statement manipulation is an ongoing problem, and investors who buy stocks or bonds should be aware of its signs and implications.
  9. Personal Finance

    Why You Should Understand The Stock Market

    Even if you don't invest a cent in stocks, you should still understand how the stock market works. Find out why.
RELATED TERMS
  1. Manipulation

    The act of artificially inflating or deflating the price of a ...
  2. High Close

    A tactic used by stock manipulators; they make small trades at ...
  3. Wall Street

    1. A street in lower Manhattan that is the original home of the ...
  4. Equity Market

    The market in which shares are issued and traded, either through ...
  5. Bloodletting

    A period marked by severe investing losses. Bloodletting may ...
  6. Main Street

    A colloquial term used to refer to individual investors, employees ...
Hot Definitions
  1. Graduate Management Admission Test - GMAT

    A standardized test intended to measure a test taker's aptitude in mathematics and the English language. The GMAT is most ...
  2. Magna Cum Laude

    An academic level of distinction used by educational institutions to signify an academic degree which was received "with ...
  3. Cover Letter

    A written document submitted with a job application explaining the applicant's credentials and interest in the open position. ...
  4. 403(b) Plan

    A retirement plan for certain employees of public schools, tax-exempt organizations and certain ministers. Generally, retirement ...
  5. Master Of Business Administration - MBA

    A graduate degree achieved at a university or college that provides theoretical and practical training to help graduates ...
  6. Liquidity Event

    An event that allows initial investors in a company to cash out some or all of their ownership shares and is considered an ...
Trading Center