Broker buys 1.6 mill shares, instead of 1625

http://tech.fortune.cnn.com/2012/12/05/rochdale-securities-apple-miller-fraud/

"The client had asked Miller to buy 1,625 shares of Apple -- worth about $1 million at the opening price of $620 a share. Instead, Miller bought 1.625 million Apple shares -- a billion dollars worth -- allegedly assuring his firm, Rochdale Securities, that the client was good for the money and would assume the risk.
Miller's plan, according to the complaint, was that Apple would beat the Street's estimates, the stock would soar, and he would pocket the difference between his client's profits and the gains from the 1,000-fold larger trade.

Unfortunately for Miller, Apple disappointed Wall Street that day, falling short of analysts' earnings expectations and offering surprisingly conservative margin guidance. Instead of soaring, the stock fell. It closed the next day at $601.25, down $18.75 (3%) from Thursday's opening price.

On paper, those 1.6 million Apple shares were worth about $30 million less than what Miller paid for them.

Miller was charged with wire fraud, which carries a maximum penalty of 20 years. He was released after posting a $300,000 bond."

 

Seems like Miller is not the brightest apple in the bunch.

 

I wonder if he had done this before.

And I wonder how often this happens on Wall St.

 

Always looking for that cheap option.

 

He's gonna get "traded around a lot" in prison. :eek:

 

Trapper

 

I never understood why so few white collar criminals were able or willing to jump bail and flee the country. First, they should have money hidden for rainy days, second, being a dishwasher in Indonesia still beats 10 years prison in the US....

 

I wonder how much a dishonest broker/brokerage can get away with? As much as a mechanic?

I was short wheat once and my stop was 'hit' even though the chart showed that day that the price never got that high. The brokers just repeated to me, "You got stopped out. You got stopped out."

I checked time and sales. Once again, I should never have been stopped out that day.

I called another broker. He told me to tell the party in question that I will be calling the NFA if they don't give me my $ back.

In 5 minutes they were scurrying to get me my refund.

 

I bet it would have never made the news nor any investigation if it was a profitable trade.

 

good question...probably they were overconfident that this will not happen to them and so never prepared for this and when the time came, they were unprepared to do this.

Btw, nick lesson did actually flew out of hongkong but he was arrested in dubai and sent to london to serve prison. I think a better method would be to run away by sea and not by air. But sea journey could be risky - so maybe those guys think its better to serve 10 yrs rather than die in a small ferry at sea. What do you think?