Printed from http://www.electronista.com

Rochdale trader arrested, charged in $1B AAPL fraud scheme

updated 04:00 am EST, Wed December 5, 2012

Cash-in plan backfires, leaves company with heavy losses

A now-fired broker at Rochdale Securities tried to quickly cash in on a stock windfall generated by Apple's earning announcements, but ended up costing his employer millions and has been arrested and charged with fraud. David Miller's scheme was roiled when AAPL fell instead of rose on the company's record-breaking quarter, due to a slip in expected iPad growth. It is charged that he improperly bought 1,000 times the number of shares requested by a customer, planning to dump the excess and pocket the profit when the price went up.

Miller is charged with lying about a "mistaken" purchase of 1.625 million shares of AAPL (the original customer had requested 1,625 shares) and telling colleagues the customer was covering a short position rather than himself. The transactions happened over the course of the day on October 25, with Miller knowing that Apple's fiscal fourth-quarter earnings would not be revealed until after the markets closed.

On top of the fraudulent stock buying, Miller set up a hedge to try and protect himself in case the stock fell. He told a rival brokerage that he was leaving Rochdale and may come to work for them. On October 25, before Apple announced their earnings, Miller told the rival brokerage to sell a half-million shares of AAPL. They did so, earning a healthy profit that would smooth the way for Miller to jump ship if things went bad. Had AAPL gone up and the rival broker lost money, Miller would have kept his job -- and profits -- at Rochdale.

Miller has surrendered to the FBI on wire fraud charges and was released on a $300,000 bond, reports the Financial Times. If convicted, he is at risk of up to 20 years in prison. Rochdale, once it became aware of the losses, traded out its positions on AAPL, but not before losing more than $5 million and putting the company's capital at risk, crippling its ability to make speculative purchases or execute customer orders.



By Electronista Staff
Post tools:

TAGS :

toggle

Comments

  1. blahblahbber

    Banned

    Joined: 02-01-05

    He should have called me for advice. oh well...

Login Here

Not a member of the MacNN forums? Register now for free.

toggle

Network Headlines

toggle

Most Popular

Sponsor

Recent Reviews

Adesso Compagno X Bluetooth keyboard

The shift from typing on physical keyboards to digital versions on smartphones and tablets hasn't been an easy for many consumers. Fro ...

Polk Audio 4 Shot headset

Sound quality and design are two of the biggest areas of focus for manufacturers when coming up with a new gaming headset. Depending o ...

Patriot Supersonic Phoenix USB 3.0 drive

USB thumb drives aren't the end all solutions for data transfer and traveling needs. Sometimes people want something with a little mor ...

Sponsor

toggle

Most Commented

 
toggle

Popular News