Former Rochdale Securities stock broker David Miller has been arrested on Federal wire fraud charges for allegedly using company money to buy US$1 billion in Apple stock for his own gain which ultimately left his employer with a $5 million loss.
"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," said U.S. Attorney for the District of Connecticut David Fein.
Mr. Miller claimed that he accidentally bought 1.625 million shares of Apple's stock when a customer actually requested 1,625 shares, then told coworkers the client was covering a short position. The transaction happened on October 25, which was also the day when Apple announced its fourth fiscal quarter earnings.
Had Mr. Miller's plan gone as expected, he would've made millions off of the transaction as Apple's stock rose in after hours trading. Instead, Apple's stock dipped thanks to lower than expected iPad sales numbers.
Federal agents investigating the case said Mr. Miller had been planning his schemes for weeks convincing another broker-dealer to take a short position on 500,000 shares of Apple's stock under fales pretense that he was also trading for a company he wasn't actually associated with. They allege he used that part of his scheme to hedge against the bigger stock purchase he was initiating at Rochdale.
Following is failed scheme. Mr. Miller lost his job, and now faces the possibility of spending the next 20 years in jail for committing wire fraud.
"As is so often seen in these types of cases, the alleged criminal conduct of Miller was for personal gain at the expense and detriment of others," said FBI Special Agent Kimberly Mertz, who was in charge of the investigation. "Manipulating and orchestrating stock transactions in such a manner is a very serious criminal offense and its impact can be both devastating and lasting."
Mr. Miller surrendered himself to FBI agents on Tuesday, and has been released on a $300,000 bond.
Apple's stock is currently trading in the pre-market at $569.77, down 6.08 (1.06%).