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Trader charged in $1 billion Apple scheme


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Trader charged in $1 billion Apple scheme


NEW HAVEN, Conn. -- A trader from New York has been charged in a scheme that involved the unauthorized purchase of about $1 billion of Apple stock that wound up costing his Connecticut-based employer $5 million, federal prosecutors said Tuesday.

David Miller, while employed as an institutional sales trader for Rochdale Securities LLC in Stamford, executed a trade to buy 1.6 million shares of Apple Inc. stock in October on a day the company was scheduled to announce earnings, prosecutors said. The scheme was designed so Miller would profit if the stock price rose, but it declined, they said.

A Rochdale customer stated it had ordered only 1,625 shares of Apple, the Cupertino, Calif.-based maker of iPods, iPhones and iPads. Miller falsely claimed that he had made a mistake in ordering many multiples of what was written in a client's order, authorities said.

In telling Rochdale that he was simply executing a customer order, Miller misrepresented that the customer was at risk of loss if the trade proved unprofitable when he knew that it was Rochdale that would bear the risk of loss, prosecutors said.

As a result of the scheme, Rochdale was left holding more than 1.6 million shares of Apple stock, authorities said. It promptly traded out of the position but suffered losses of about $5 million.

Miller was charged with wire fraud. His attorney, Kenneth C. Murphy, declined to comment Tuesday.

Authorities say Miller, who lives in Rockville Centre, N.Y., just east of New York City, duped another broker-dealer into taking on a significant short position in Apple stock. Miller convinced the broker-dealer to sell 500,000 shares of Apple stock, falsely claiming that he was trading for the account of a company with which he had no relationship and for which he was not authorized to trade, prosecutors said.

Miller engaged in that part of the scheme to hedge against the large purchase of Apple stock he was executing at Rochdale, prosecutors said. He placed the broker-dealer at risk of sustaining substantial losses, they said.

Miller, 40, appeared Tuesday in U.S. District Court in Bridgeport. He didn't enter a plea and was released on a $300,000 bond. He could face up to 20 years in prison if convicted

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Rochdale Securities are a bunch of liars if they claim they unwound this trade and only suffered a five million dollar loss.

Apple always halts trading in it's stock before it's scheduled earnings release and Oct 25th was no exception. After the earnings were put out and it was released for trading it gapped down significantly (can't recall exactly how much). There's no way Rochdale got out of a position that size (1.6 million shares of Apple is a huge position) with as small of a loss as they claim. That would mean they only lost $3.13/share. That's pure unadulterated bs.

If they only lost that small amount why were they forced to raise capital shortly thereafter?

Also, where the heck are their internal risk controls? How is a puny firm like that putting on a billion dollar position without alarm bells going off?

In less than 2 minutes I can find 10 stories just like this one only 100 times worse. Google the names Nick Leeson, Jerome Kerviel or Kweku Adoboli for starters.

Wall St. and the rest of the financial world is a casino pure and simple. Most people are under the false impression that people employed in finance are pretty smart. Quite the opposite is true. The financial industry employs a disproportionate percentage of people who are as dumb as the day they were born and who have the ethics of a sewer rat.

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