A trader apparently purchased Apple Inc. (NASDAQ:AAPL) stock worth $1 billion in a fraudulent trade, which backfired and brought Rochdale securities to its knees, after which, he was arrested and charged with fraud. The fraud cost the employer $5 million.
David Miller, employed as an institutional sales trader at Rochdale Security, executed a trade to buy 1.6 million shares of Apple Inc. (NASDAQ:AAPL), when the company was to announce its earnings. He initiated the purchase with the hope of earning a profit if the stock price moved up after the earnings announcement, but the price declined, and Miller suffered the loss. He is charged with fraud in a 13 page criminal complaint of wire fraud.
Today, Apple is the largest public company in the world, and the group’s iPhones can be found in stores all over the globe, but not long ago the company was a baby when the Apple IPO was filed in the 1970s. Not only is Apple the world’s most valuable company, but it’s also arguable that Read More
“As is so often seen in these types of cases, the alleged criminal conduct of Miller was for personal gain at the expense and detriment of others,” FBI agent Kimberly Mertz said yesterday in a statement. “Manipulating and orchestrating stock transactions in such a manner is a very serious criminal offense and its impact can be both devastating and lasting”.
Miller misrepresented while reporting the trade to Rochdale. Miller said that if the trade suffers loss, then the client will be at a loss and not Rochdale securities. Miller knew that Rochdale would have to bear the brunt in case the trade resulted in loss, prosecutor said. As a result, Miller was left holding 1.6 million shares of Apple Inc. (NASDAQ:AAPL). It promptly traded out of the position, but suffered the losses of around $5 million.
Authorities said that Miller duped another broker dealer by prompting him to initiate short selling in Apple Inc. (NASDAQ:AAPL) stocks. Miller convinced the dealer to short sell 500,000 shares of tech giant Apple Inc. (NASDAQ:AAPL). He falsely claimed that he was trading for the company, with which he had no relationship and for which, he was not authorized to trade. Miller advised the broker dealer to sit in a short sell position to hedge against the large purchase he made in Rochdale Security. With this, he placed broker dealer at risk of bearing massive loss, the prosecutor said.
David Miller appeared in the court alongside his lawyer, Kenneth Murphy of Simon & Partners, and his family. He was released on $300,000 bail. If the crime proves true, he could face up to 20 years of imprisonment. Rochdale’s CEO, who helped found Rochdale securities in 1975, was also present in court when Miller appeared. Crowley is trying to sustain the firm after massive loss.
The Federal Bureau of Investigation, the Securities and Exchange Commission, and the financial Industry Regulatory Authority, which have been investigating the case together, are still trying to identify whether the Miller’s trade is a part of larger scam.