Wall Street’s 10 Most Notorious Stock Traders


He also tried to recoup through investments, but he was a lousy investor. As the repeal of Prohibition seemed increasingly likely, Whitney helped establish a company to distribute a type of applejack called Jersey Lightning. From a high of $45, the stock sank by 1937 to $3.50. Whitney and his brokerage firm owned 134,500 shares.

Whitney had, of course, borrowed on the stock, and as the price declined he had to put up more securities to maintain his margin. When he no longer could put up his own money, he began stealing from others, including his wife’s trust fund and the New York Yacht Club. He also misappropriated securities from the New York Stock Exchange Gratuity Fund, a life insurance program for the widows and orphans of exchange members.

Whitney had been named a trustee of the fund, and his firm handled the fund’s brokerage business. In March 1937 the fund instructed Whitney to sell $225,000 worth of bonds and to buy other securities with the proceeds. Instead Whitney used the bonds as additional collateral on his Jersey Lightning stock. He managed for several months to put off the Gratuity Fund clerk’s requests for the new securities, but in November the clerk

informed the board, which ordered Whitney to produce them forthwith.

Whitney now confessed to his brother. George Whitney was profoundly shocked. He informed Thomas Lamont, J. P. Morgan & Company’s managing partner, and together they decided to lend Whitney the money he needed to buy the missing securities. They feared that the revelation of such a scandal would profoundly damage the Wall Street community.

George Whitney also insisted that his brother come clean about all his finances, sell Richard Whitney & Company and his Jersey Lightning stock, and retire from business. But no buyers were interested in either the firm or the stock. On March 7, 1938, the president of the New York Stock Exchange announced that Richard Whitney & Company had been suspended for “conduct contrary to just and equitable principles of trade.”

Events moved swiftly thereafter. Whitney was arrested on March 10 and pled guilty. On April 11 he was sentenced to five to 10 years and taken into custody. The next day, 6,000 people turned out in Grand Central to watch the former president of the New York Stock Exchange board the train to Sing-Sing Prison, where he spent the next three and a half years. His brother and father-in-law made good on all the money he had stolen.

Anthony De Angelis

Anthony De Angelis grew up in the Bronx, the son of Italian immigrants. By his teenage years, he was working in a meat and fish market and showed a flair for business, although no great concern with ethics, selling substandard beef and other commodities to a government lunch program.

By the late 1950s he was a major player in the vegetable oil markets, speculating in the futures markets and exporting large quantities of soybean, corn, and cottonseed oil. He stored the various oils at a tank farm in Bayonne, New Jersey.

In 1962 he decided to corner the market in vegetable oils, aiming to control the entire supply so that all dealers would have to buy from him at a price he named. There is nothing illegal in itself about cornering a commodity or a security, but modern rules make it difficult to achieve, and there has not been a corner on the New York Stock Exchange since the early 1920s.

De Angelis needed leverage to finance his corner. Commodities, unlike stocks, can be bought on tiny margins, but to achieve a corner, one must control a vast supply.

The American Express Company had recently gotten into the business of warehouse receipts, which, in effect, guaranteed that a storage facility held a given amount of a commodity. The owner could then use a receipt as collateral for loans. De Angelis used his receipts to obtain massive loans from several banks and also from two major brokerage firms, Ira Haupt & Company and Williston & Beane.

The warehouse receipts were based on the oil stored in Bayonne. American Express inspected them periodically, but De Angelis was cunning and the inspectors were lax. He filled some tanks mostly with water, leaving only a float of oil on top. A maze of pipes enabled him to switch oil from one tank to another, making it appear that they were all full when most were empty.

The scheme fell apart in November 1962. Tipped off, inspectors found the water. The result was a massive crash in salad oil futures in the commodities market, while De Angelis’s company declared bankruptcy. Now Ira Haupt and Williston & Beane found themselves in mortal peril. Indeed, Ira Haupt owed banks $37 million it had loaned in turn to De Angelis, which he now had no means of paying back.

The New York Stock Exchange suspended both firms from trading. This caused their customers to begin withdrawing their cash and securities, in effect starting a run on the two firms. The exchange worried that this might create a full-blown panic. Then President John F. Kennedy was assassinated on Friday, November 22, 1963. The market closed early, and it remained closed on Monday for the national day of mourning. The exchange used the time to assess its member firms to cover the debts owed to customers by the two firms, to liquidate Ira Haupt, and to have Williston & Beane taken over by Merrill Lynch. A trust fund was established to meet such emergencies in the future.

American Express could have put its warehouse subsidiary into bankruptcy and escaped much of its liability. But it chose to honor its subsidiary’s commitments instead. The young Warren Buffett took advantage of the resulting plunge in the price of American Express stock to buy 5 percent of the company for a mere $20 million, an investment that paid off handsomely.

De Angelis went to jail for seven years.

Cortes Randell