Richard Whitney (financier)
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Richard Whitney (August 1, 1888 - December 5, 1974), was an American financier, president of the New York Stock Exchange 1930-1935, and a convicted embezzler.
Richard Whitney was born into a wealthy Boston, Massachusetts family, growing up friends of the Boston Brahmin elite. He was a descendant of John Whitney (1592-1673), an English immigrant who arrived with the Winthrop Fleet in 1630 and who settled in Watertown, Massachusetts. Although a very distant cousin many times removed, the prominent Whitney family of New York also descend from this same John Whitney. Richard Whitney's father was president of North National Union Bank and educated Richard at Groton School and Harvard University.
In 1910, Richard Whitney followed his older brother, George Whitney, Jr., and moved to New York City where he established his own bond brokerage firm. Two years later, using money borrowed from his family, Richard Whitney & Co. purchased a seat on the New York Stock Exchange (NYSE). His uncle had been a partner in J.P. Morgan & Co. and brother George proved invaluable because of his position at the Morgan Bank which allowed him to direct substantial business to Richard's brokerage.
Richard Whitney married Gertrude Sheldon Sands in 1916 with whom he had three children. His father-in-law had served as president of the powerful Union League Club and Whitney became a member of a number of the city's elite social clubs and was appointed treasurer of the New York Yacht Club. In 1919 he was elected to the board of governors of the New York Stock Exchange and before long would be named its vice-president.
[edit] Downfall
At the same time that Richard Whitney was achieving great success, his brother George had also prospered at Morgan bank and by 1930 had been anointed as the likely successor to bank president, Thomas W. Lamont. While Richard Whitney was assumed to be a brilliant financier, he in fact had personally been involved with speculative investments in a variety of businesses and had sustained considerable losses. To stay afloat, he began borrowing heavily from his brother George as well as other wealthy friends. After obtaining loans from as many people as he could, Richard Whitney turned to embezzlement to cover his mounting business losses and to maintain his extravagant lifestyle. He stole funds from the New York Stock Exchange Gratuity Fund as well as from the New York Yacht Club where he served as the Treasurer. In addition, he stole $800,000 worth of bonds from his father-in-law's estate.
Having retired as President of the NYSE in 1935, Whitney remained on the board of governors but in early March of 1938 his past began to catch up to him when the comptroller for the NYSE reported to his superiors that he had established absolute proof that Richard Whitney was an embezzler and that his company was insolvent. Within days, events snowballed and Whitney and his company would both declare bankruptcy. An astonished public learned of his misdeeds when on March 10 he was officially charged with embezzlement by New York County District Attorney Thomas E. Dewey. Following his indictment by a Grand Jury, Richard Whitney was arrested, and eventually pleaded guilty. He was sentenced to a term of five to ten years in Sing Sing prison. On April 12, 1938, six thousand people turned up at Grand Central Station to watch as a scion of the Wall Street Establishment was escorted in handcuffs by armed guards onto a train that delivered him to prison. Despite everything, Richard Whitney's wife and family stood by him and friend May Kinnicutt and her husband G. Hermann Kinnicutt, a partner in a stockbrokerage firm, provided Mrs. Whitney with a farmhouse to live in at Far Hills, New Jersey. George Whitney eventually made restitution for all the money his brother owed.
A model prisoner, Richard Whitney was released on parole in August of 1941 after serving three years and four months in Sing Sing. Permanently banned from dealing in securities, he was living a quiet life in Far Hills, New Jersey at the time of his death in 1974.
The story of Richard Whitney on Wall Street was recounted in detail by author John Brooks as part of his 1969 book "Once in Golconda : A True Drama of Wall Street 1920-1938" (ISBN 0-471-35753-7).
