Pecora Commission Exposes Albert Wiggin's Short Selling of Chase Bank Stock

The Pecora Commission revealed that Albert Wiggin, chairman of Chase National Bank, had secretly profited from his bank’s collapse during the 1929 crash. Beginning in September 1929, even as Wiggin publicly committed Chase’s funds to investment pools intended to stabilize the falling stock market on Black Thursday, he privately sold short over 42,000 shares of Chase stock through six different private investment corporations he had established. Wiggin profited approximately $4 million from betting against his own institution while he had a fiduciary duty to other stockholders. He structured the transactions through a Canadian shell company to avoid paying U.S. income taxes on his gains. Ferdinand Pecora later recalled in a 1965 interview: “In the entire investigation, it is doubtful if there was another instance of a corporate executive who so thoroughly and successfully used his official and fiduciary position for private profit.” Though not illegal at the time, Wiggin’s betrayal was considered profoundly unethical. The scandal prompted the “Wiggin Provision” in the Securities Exchange Act of 1934, Section 16, which Pecora, Thomas Corcoran, James Landis, and Benjamin Cohen specifically drafted as “the anti-Wiggin section” to prevent company directors from short selling their own stocks and profiting from their company’s demise. Wiggin eventually retired under pressure.