Former Rochdale Securities trader David Miller was arrested and charged by Connecticut’s U.S. Attorney with wire fraud, CNBC’s Mary Thompson reported moments ago.Here’s an excerpt from the press release emailed to Business Insider:
As alleged in the criminal complaint, MILLER schemed to defraud Rochdale Securities LLC (“Rochdale”) by executing a trade to buy 1,625,000 shares of stock in Apple Inc. (“Apple”) on October 25, 2012, the day Apple was scheduled to announce its earnings for the quarter. The scheme was designed so that MILLER would profit if the stock price rose after Apple announced its earnings later that day. In falsely representing to Rochdale that he was simply executing a customer order, MILLER misrepresented that the customer was at risk of loss if the trade proved unprofitable, when he knew that it was Rochdale that would bear the risk of loss. When the stock price declined after the earnings announcement, Rochdale’s customer stated it had only ordered 1,625 shares of Apple. MILLER falsely claimed that he had made a mistake in ordering many multiples of what was written in a client’s order.
According to the release, the Stamford-based brokerage firm had 1.6 million shares in Apple. It got out of the position and lost around $5 million.
Following the bad Apple trade, Rochdale, which employs noted bank analyst Dick Bove, has been searching for a lifeline to stay afloat. What’s more is some traders at the Stamford-based brokerage have left.
Miller surrendered to the FBI in Bridgeport, CT earlier today and was released on $300,000 bond.
A wire fraud carries up to 20 years maximum sentence in prison if the person is convicted.