Who was the first person charged by the SEC?

By Andrew Beattie AAA
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.

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