David Miller, a trader for Rochdale Securities, Stamford, has been arrested today based on a federal criminal complaint charging him with wire fraud.
The Federal Bureau of Investigation (FBI) claims that the 40-year-old trader was part of a fraudulent scheme when employed as a trader for Rochdale Securities. In a "get-rich-quick" scheme, Miller allegedly orchestrated an unauthorized purchase of roughly $1 billion in Apple stock, which left his employer with severe financial losses.
Within the criminal complaint, the FBI say that Miller cooked up a quick way to make money by purchasing 1.625 million Apple shares Apple with the brokerage's money on October 25 this year, the same day that the iPad and iPhone maker was due to release their quarterly earnings. The pinnacle point of this transaction was simple; expecting stocks to rise, Miller would make a nice chunk of change.
However, the purchase backfired, as Apple stocks fell, leaving Rochdale Securities with a serious problem.
Miller did not use his own cash reserves -- naturally -- to fund the purchase, and told his employers it was an honest mistake, as he meant to purchase 1,625 Apple shares, rather than 1,625,000 -- which was a result of multiple copies of the same order. As the shares were bought with the brokerage's money, Rochdale bore the financial loss.
As a result, Rochdale Securities was left with over 1.6 million shares of Apple stock. Even thought the firm rapidly traded out, it still suffered financial losses of approximately $5 million.
The Feds also say that the trader may have defrauded another broker-dealer at the same time. Through "misrepresentations" it is alleged that Miller convinced an unrelated company to sell 500,000 Apple shares in order to conduct the larger get-rich-quick scheme at Rochdales.
"As alleged, this defendant orchestrated the unauthorized purchase of approximately $1 billion of Apple stock in a fraudulent get-rich-quick scheme that backfired, causing massive losses for his employer," stated U.S. Attorney Fein. "I commend the FBI, with the substantial assistance of the SEC and FINRA, for its rapid response and for bringing this defendant to justice. The U.S. Attorney’s Office and our many partners on the Connecticut Securities, Commodities and Investor Fraud Task Force are committed to protecting investors and the integrity of American capital markets."
Miller surrendered himself to the FBI today in Bridgeport, and has been released on a $300,000 bond. The allegations are being investigated by the FBI, and if found guilty of wire fraud, Miller could face a maximum term of 20 years behind bars.