“A suspended trader at New York hedge fund Quad Capital is under US federal investigation for his alleged role in a $1bn rogue trading scandal involving the unauthorised purchase of Apple shares, according to attorneys involved in the matter,” Arash Massoudi and Kara Scannell report for The Financial Times.

“The trader, Harlan Sender, was suspended by Quad after the order to buy Apple shares on October 25 came under investigation. David Miller of brokerage Rochdale Securities took the order and used it to purchase 1.63m Apple shares, 1,000 times the size of Mr Sender’s written instruction,” Massoudi and Scannell report. “Mr Miller pleaded guilty this month to conspiracy and wire fraud in connection with the trade. Prosecutors said at the time that he placed the order for a co-conspirator at a proprietary trading company. Prosecutors claim that Mr Miller and his co-conspirator hoped to profit from a rise in the share price of Apple, but were ready to claim the order had been misread by Mr Miller if Apple fell.”

Massoudi and Scannell report, “When Apple shares did fall, Rochdale, a boutique brokerage, was forced to wind down the position at a loss of $5.3m. The firm subsequently went out of business. Quad Capital said he was the source of the buy order and has been questioned by federal authorities. No charges have been filed against Mr Sender and the attorneys both for Mr Sender and the firm said he had done nothing wrong.”

Read more in the full article here.

[Thanks to MacDailyNews Reader "Fred Mertz" for the heads up.]

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