Trader behind bars for 30 months following Apple stock conspiracy

Trader behind bars for 30 months following Apple stock conspiracy

Summary: A former trader has been sentenced to 30 months in jail for his role in purchasing roughly $1 billion in Apple stock without permission -- eventually leading to the liquidation of the financial services company he worked for.

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TOPICS: Apple
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A former trader who bought approximately $1 billion in Apple stock without permission will spend two and a half years behind bars.

According to Reuters, David Miller -- a former trader for Stamford-based Rochdale Securities -- was sentenced by U.S. District Judge Robert Chatigny in Connecticut after being accused of fraudulently buying 1.625 million Apple shares.

The defendant conspired with another individual to buy the shares for roughly $1 billion, on the same day that Apple reported third-quarter earnings last year. The trader hoped that the tech giant's stock price would rise, allowing him and his co-conspirator to make a profit after orchestrating the scheme.

The second defendant's identity has not been revealed.

However, stock prices plummeted due to poor iPhone sales. Third quarter earnings were $8.8 billion, or $9.32 a share, on revenue on revenue of $35 billion -- which was a disappointment relative to investor expectations.

After the gamble failed, Miller told his financial services employer, Rochdale Securities, that a fictitious customer had only asked for 1,625 AAPL shares, worth $1 million. However, the former broker claimed that a mistake occurred to due to multiple copies of the same order being submitted. In an attempt to write off the loss, prosecutors said that Miller also defrauded another brokerage by convincing it to sell 500,000 Apple shares.

However, the damage was done, and Rochdale Security faced undercapitalization of $5.3 million -- after trading out the shares -- which eventually led to the company collapsing, according to filings from another suit involving the Securities and Exchange Commission.

The 41 year-old pleaded guilty seven months ago to wire fraud and conspiracy, and will now spend 30 months behind bars. The former trader could have been ordered to spend up to 20 years in prison. Miller's attorney Kenneth Murphy said:

"As we said on the day of his plea, this was a good and decent man who had led an otherwise exemplary life who acted out of desperation rather than greed. Judge Chatigny saw this to be the case and gave David a fair and reasonable sentence considering all these factors."

Topic: Apple

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4 comments
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  • Hmm , I'm missing something

    where does the desperation rather than greed come from?

    Sure he was desperate to get out of the situation but it seems like greed that led him to buy a billion dollars of stock in the first place. A billion dollars he didn't have, that's fraud and greed in my book.

    So was he "desperate" for a cancer treatment or something that led him to cook up this scam? sorry that's still not acceptable. He should get at least 10 years minimum.

    These white color criminals think they can get away with it because they do and when they do get caught they get a slap on the wrist.
    greywolf7
  • And if the stock price would go up? - He would be the Hero!

    And if the stock price would go up?
    He would be the Hero that gets a big bonus.
    I guess they are not too big to fail
    man_28
  • My punishment

    I'd give him lifetime on community service at the minimum wage ...
    ... and the judge who let him off the same.
    jacksonjohn
  • Pump-and-dump gone bad

    I think I would have given him 5, but I'll defer to the judge.

    I don't think that buying corporate stock with borrowed money should even be allowed (not allowing it would stop 90% of the speculation), but it's been an established practice forever and is unlikely to stop. However, not allowing corporate stock to be used as collateral for a loan would definitely have a beneficial effect (except for investment bankers and speculators). Existing stockholders would take a short term loss, but they'd get over it fairly quickly, I'd think.
    John L. Ries