“A former trader was sentenced to 2 1/2 years in prison on Tuesday for an unauthorized purchase of about $1 billion in Apple Inc stock that eventually led to the demise of financial services firm Rochdale Securities,” Joseph Ax reports for Reuters. “David Miller, 41, was sentenced by U.S. District Judge Robert Chatigny in Hartford, Connecticut, seven months after pleading guilty to wire fraud and conspiracy.”
“Prosecutors said Miller, of Rockville Centre, New York, conspired with another individual to buy 1.625 million Apple shares on Oct. 25, 2012, the same day that the company planned to report third-quarter results, in the hopes that the share price would rise,” Ax reports. “The alleged co-conspirator was not named in court papers.”
“Miller falsely told Rochdale the trade was for a customer who had, in fact, only asked to buy 1,625 shares, prosecutors said,” Ax reports. “When the gamble failed, Rochdale faced $5.3 million in losses on the additional unauthorized shares, leaving the firm undercapitalized, according to a related civil lawsuit filed against Miller by the U.S. Securities and Exchange Commission. As a result, the firm eventually collapsed, the SEC said.”
Ax reports, “Prosecutors also said Miller defrauded another brokerage by convincing it to sell 500,000 shares of Apple to hedge against the purchase he had made at Rochdale. The second brokerage, which prosecutors said was able to trade out of the position at a profit, was not identified in court papers.”
Read more in the full article here.
Related articles:
Suspended Quad Capital trader faces U.S. federal probe over $1 billion rogue Apple order – May 1, 2013
Ex-Rochdale broker pleads guilty in Apple stock buy case – April 15, 2013
Former Rochdale Securities trader arrested in fraud scheme involving Apple stock – December 4, 2012
Apple’s stock has the flu; FBI probing rogue trader at Rochdale Securities – November 6, 2012
Rochdale said to seek capital lifeline after AAPL trading error – November 2, 2012
Arrested a year ago and convicted. Only the truly greedy are easy to catch!
This dirt bag thought he could sell a billion’s worth of shares on the news of some Apple product announcement? Everyone knows AAPL tanks on good news.
Yep, there’s the greedy and the imbecile greedy. Here’s the problem…, there’s more than one out there.
The sickness of this story is that this guy would have been a hero if the same fraudulant trade had made a profit.
Certainly would have received a big bonus
and then, the seeds of Madoff are sown
What is truly missed in this story:
How can a broker buy over 1 million shares without the money?
This right there is the biggest scheme of all in wall street.
The big money brokers use this to destroy companies they don’t like or will not play by their rules.
Imagine doing the opposite? You put a sell in for 1 million shares that you don’t really own. Then 3-5 more brokers do the same, throw a little FUD in the mix and all the normal brokers and public panic and sell their legit shares. Next thing you know, the company looks like takeover bait. “All because of some brokers that want to manipulate the system.”
Traders do, in fact, do that. It’s called naked short selling.
He’s not a “broker”, he’s a trader.
“How can a broker buy over 1 million shares without the money?”
Securities firms settle up at the end of the day, because there is so much trading going on, with traders taking opposite positions even within their own firm. At the end of the day, when the markets close, they determine their NET position, and make sure there’s enough funding to support it. Usually, there’s an overnight loan from a bank that covers any capital shortfall. Of course, that credit line is pre-negotiated, and has a limit. Clearly in this case, the firm’s credit line could not cover this trader’s enormous position.
“The big money brokers use this to destroy companies they don’t like or will not play by their rules.”
Like who?
“Imagine doing the opposite? You put a sell in for 1 million shares that you don’t really own. Then 3-5 more brokers do the same, throw a little FUD in the mix and all the normal brokers and public panic and sell their legit shares”
Naked short selling? A firm needs to have “borrowed” shares to support a naked short. And, when you borrow that many from other brokers, when you try to instill panic into the market, the brokers you borrowed from will out your little scheme.
He clearly was behind in reading is e-mails. The standard Wall Street line when they get caught is “We’re doing Gods work.”
Lloyd Blankfein, the boss of Goldman Sachs, claimed yesterday (Nov 7, 2009) that bankers were doing ‘God’s work’.
The only problem here is that not enough of these assholes are doing time.
The stock market is right alongside Indian, (sorry – Native American), casinos.
Just buying back the stolen land Jean….
Swift justice….not in the case of patent infringement.
You beat me to it! I was going to say: “Meanwhile, over in the Apple v. Samsung case….”
silly trader: everyone knows AAPL goes down after every announcement; it’s just a matter of how much