A former broker at Rochdale Securities was arrested by FBI agents and accused of fraud for trying to profit personally from purchasing shares of Apple worth more than $1 billion, bought with the company money.
David Miller, 40, surrendered to the FBI in Bridgeport, Connecticut, and was accused of fraud in connection with transactions that took place on 25 October, the day Apple reported its financial results, writes the Financial Times.
According to the indictment, Miller sought personal profit from transactions that have left the brokerage company with over 1.6 million shares of Apple. In an attempt to protect against the decline of Apple shares, Miller had been engaged in a hedging strategy deceiving another broker.
“The accused had orchestrated the unauthorized purchase Apple shares worth about $1 billion in a get rich quick scheme that failed, causing substantial losses to the company where he worked,”
said Connecticut District Attorney, David Fein.
Rochdale Securities recorded losses of $5 million after it quickly liquidated positions in Apple shares. The loss left the company with a “negative capital position.”
Miller would have presented the entire transaction as an order for a client. Shares worth $1 billion were accumulated during the day of 25 October. The plan was designed to generate profit through the sale of Apple shares after the company had announced the results later that day. But after the disappointing earnings, Apple’s stock fell, according to the complaint against Miller.
The trader said later that he accidentally bought 1.625 million Apple shares instead of to 1,625 shares as the customer actually requested.
Miller asked another brokerage company, which he told that he’s leaving his current job, to sell 500,000 Apple on his behalf. The trader closed this position the next day on profit, due to the stock decline.
If found guilty, Miller risks 20 years in prison. The former broker was released on $300,000 bail by a federal judge in Connecticut.
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