The 1920s saw even more abuses. Trading on inside information was widespread, and brokerage firms were using high-pressure sales campaigns to sell stocks.
Widespread abuses were also occurring in investment trusts, the forerunner of the modern-day mutual fund. Many investment trusts were wiped out by the Stock Market Crash of 1929, as were many other investors.
Manipulation of stock prices in the 1920s was an all too common occurrence. In 1929 alone, over one hundred stocks on the New York Stock Exchange were being manipulated by pools of traders acting together to defraud the public.
The Stock Market Crash of 1929 and the resulting Great Depression caused Congress to adopt legislation that was designed to impose high ethical standards on the securities industry.