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Former trader sentenced to 30 months in prison for fraudulent $1B AAPL purchase

post #1 of 25
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A Connecticut court on Tuesday sentenced former trader David Miller to 30 months in prison for enacting and conspiring on an unauthorized purchase worth $1 billion of Apple stock.

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AAPL stock performance in October 2012. | Source: Yahoo!


U.S. District Court Judge Robert Chatigny's ruling puts an end to the seven-month long case, which saw Miller plead guilty to wire fraud and conspiracy, reports Reuters.

In December 2012, Miller was arrested by the U.S. Federal Bureau of Investigation for a fraudulent stock purchase and was subsequently charged with wire fraud. Prosecutors in the case said the trader conspired with one other person to buy 1.65 million shares of AAPL stock on Oct. 25, 2012, on the chance that prices would rapidly increase after a quarterly earnings announcement scheduled for that day. The second person remains unidentified.

According to reports, a client had informed Miller to make a buy of 1,625 AAPL shares, worth $1 million. Instead, the trader purchased 1.625 million shares worth $1 billion. Miller's former employer Rochdale Securities was reportedly put out of business due to the illegitimate buy.

Rochdale ended up facing $5.3 million in losses on top of the unauthorized share purchase, forcing the firm to shut its doors, according to documents from a parallel civil suit involving the Securities and Exchange Commission.

In addition, Miller is said to have persuaded another firm to sell 500,000 shares of Apple stock as a hedge against his billion-dollar bet. Court filings indicate the brokerage, which has also gone unnamed, was able to come out of the ordeal with a profit.
post #2 of 25

Good!

 

Now, let's see a few of those analysts behind bars too where some of them belong.

 

Manipulating stocks is illegal, even though the SEC doesn't really seem to give a crap about it in most cases.

post #3 of 25
Where is the conviction for Angelo Mozilo, CEO of CountryWide Mortgage, fraudster of $1.4 trillion?
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post #4 of 25
This was supposed to be a "sure thing" as Apple was flying high leading up to the buy... then the fertilizer his the air supply; Apple dropped. Lutzes were had. Soon the Ethiopian in the fuel supply was spotted hiding under his desk and good deeds were punished and his employer went toes up.
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post #5 of 25

I might be missing something here, but what's wrong with buying a lot of shares? Did he gamble using his parent company's money to do so? Would appreciate some more info from someone better versed in the stock market than I.

post #6 of 25
Quote:
Originally Posted by DarkLite View Post

I might be missing something here, but what's wrong with buying a lot of shares? Did he gamble using his parent company's money to do so? Would appreciate some more info from someone better versed in the stock market than I.

Unauthorized
post #7 of 25
Quote:
Originally Posted by DarkLite View Post

I might be missing something here, but what's wrong with buying a lot of shares? Did he gamble using his parent company's money to do so? Would appreciate some more info from someone better versed in the stock market than I.

He had permission to buy a million worth of stock using somebody else's money. Instead, he bought a billion worth of stock using somebody else's money withou permission.
post #8 of 25

Penalties for outright fraud at this scale need to be much more severe.

Proud AAPL stock owner.

 

GOA

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Proud AAPL stock owner.

 

GOA

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post #9 of 25
He should be forced to retake elementary math and learn decimal places.
post #10 of 25
What's the problem? Manipulating AAPL is the national sport.
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post #11 of 25
Perhaps he and Michael Bolton suffer from the same attention to detail disorder. Time for some Federal, pound him in the ass, prison.
post #12 of 25
Quote:
Originally Posted by DarkLite View Post

I might be missing something here, but what's wrong with buying a lot of shares? Did he gamble using his parent company's money to do so? Would appreciate some more info from someone better versed in the stock market than I.

His company had to cover $999million and 99.9% of the losses which is one reason they don't exist anymore. Not chump change.
Edited by ChristophB - 11/19/13 at 6:44pm
post #13 of 25
Quote:
Originally Posted by ChristophB View Post


His company had to cover $999million and 99.9% of the losses which is one reason they don't exist anymore. Not chump change.

Don't you think there should be a system in place that prevents you from making that size of a purchase without jumping through some serious hoops?  In the computing world we have "Are you sure you want to replace XYZ File?", so at an absolute bare minimum wouldn't you expect a trader to see a warning that looks something like "Are you sure you want to invest $1billion? (or did you totally f*ck up and mean to invest $1million?)".

post #14 of 25
Quote:
Originally Posted by chadmatic View Post

Don't you think there should be a system in place that prevents you from making that size of a purchase without jumping through some serious hoops?  In the computing world we have "Are you sure you want to replace XYZ File?", so at an absolute bare minimum wouldn't you expect a trader to see a warning that looks something like "Are you sure you want to invest $1billion? (or did you totally f*ck up and mean to invest $1million?)".

This guy had to have had tremendous trust and authority to place an order of this kind. My accounts with broker houses don't have a million dollar credit, much less a billion. This guy gamed the internal system, fully banking on his ego; he had the authority to place a ONE BiLLION DOLLAR buy...... He bet, he lost, he's done. Brokers beware.
post #15 of 25
Sounds like there is no check and balance in the system...say for every purchase of over a million, someone has to check it or the computer should alert and lock up the order... Stupid trading firm
post #16 of 25

It's hilarious the SEC goes after a small fry for spending his wealthy bosses lunch money while we still wait for the banisters on Wall Street to be put in jail.  

post #17 of 25
Just think how many innocent investors were hurt $$$$$ because of this guys manipulation of the stock. Most likely they'll never see any compensation
post #18 of 25
He knew he had to buy the shares before he could see what was in them.
post #19 of 25
The poor schmuck is thrown under the bus (not that he doesn't richly deserve it) while his firm gets away with it. The architects of the 2008 economic collapse all got away without any problems and even got to keep the hundreds of billions they stole from the American people. The trading firms and the banks are rotten to the core.
post #20 of 25
Mind your decimal places! A similar thing happened in the "Office Space" and also "Superman III" movies.
post #21 of 25

He is only guilty because he lost money.

Let's be serious, stock manipulation happens all the time.  Companies make gambles all the time.  The company made a bad bet and did not want to pay go under, so they made up this stupid excuse and an escape-goat. 

 

As an individual investor, I can't say that my wife made an un-authorized order and I would like to retract the order so I don't have to pay. Can't I?

post #22 of 25
Quote:
Originally Posted by water cooler View Post

Sounds like there is no check and balance in the system...say for every purchase of over a million, someone has to check it or the computer should alert and lock up the order... Stupid trading firm

 

There isn't enough time, these trades are done at a rate of thousands per second, this guy made the mistake of letting his employer be the stooge rather than the usual general public and their pension funds.

 

He messed up and now pays the price.

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post #23 of 25
more to the point, what sort of newb would bet on apple's share price rising after a quarterly report?
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post #24 of 25
Quote:
Originally Posted by rtd2870 View Post

He should be forced to retake elementary math and learn decimal places.

That was not the problem. Evidently, he was attempting to squeeze through an order that he could plausibly deny he placed if caught in an attempt to make a quick massive profit.

Proud AAPL stock owner.

 

GOA

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Proud AAPL stock owner.

 

GOA

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post #25 of 25
Quote:
Originally Posted by winstein2010 View Post

Let's be serious, stock manipulation happens all the time.  Companies make gambles all the time.  The company made a bad bet and did not want to pay go under, so they made up this stupid excuse and an escape-goat. 

As an individual investor, I can't say that my wife made an un-authorized order and I would like to retract the order so I don't have to pay. Can't I?

"Escape-goat"?....... Wow. That's a new one.

He was not made a scapegoat. He committed a crime. A scapegoat is completely different.

Proud AAPL stock owner.

 

GOA

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Proud AAPL stock owner.

 

GOA

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