Daniel Crowley, Rochdale's president,
said Finra, a Wall Street self-regulator, was investigating trading that
has put the company in a precarious financial position, adding, "The
firm is recapitalizing and should be talking to the market shortly." He
declined to offer more details on the trading or the investigation.
A person familiar with the thinking of Rochdale executives said a trader at the firm received an order for stock in Apple Inc. AAPL +0.63%
but bought 1,000 times the number of shares requested. The trader is
saying the extra shares were ordered by mistake, the person said, but
the firm is alleging the actions were intentional. The company suspects
the trader was working with an outside party to execute the trade and
profit at the firm's expense, according to this person.
This is bullshit no matter which way you look at it. If you can
mistakenly place an order for 1,000 times your intended purchases, then
the risk management systems of this so-called institutional brokerage is
less robust than grandma's retail web page at E-trade! If the trader
did it on purpose, then he likely did it with management's consent and
they didn't subscribe to BoomBustBlog - travesty within itself since all
who subscribed knew it was time to short Apple! See The Blog That Could Have Saved Institutional Broker - Or - Beware Of Those Poison Apples!!
Rochdale, based in Stamford, Conn., is
an institutional broker and equity-research firm that employs prominent
bank analyst Richard Bove. As of the end of 2011, Rochdale had $3.4
million in capital, according to a filing with the Securities and
Exchange Commission. On Saturday, Mr. Crowley said the errant trading
had left the company with a "negative capital position."
Amazingly enough, very few (if any) queried as to why Rochdale, with a
capital base of $3.4 million dollars could execute a trade worth a
billion dollars. Let's take an off the cuff measure of the leverage
involved here... $1,000,000,000/$3,400,000 = roughly 294x the trader
levered up the firms capital base, give or take. Who was the idiot(s) on
the other side of the trade and more importantly where the hell was
FINRA before this tiny bank had the nerve to go against BoomBustBlog
research with a 294x levered trade? Methinks FINRA was a little less
than effective here, no? Dick Bove, the rosk star bank analysts paid by
Rochdale Securities (and probably paid nearly as much as Rochdale's
capital base), should have alerted Rochdale to the risks therein, no?
Dick seems like a nice guy, but we don't always see eye to eye, reference CNBC Favorite Dick Bove Admits To Being Wrong On Banks, But For The Right Reasons, But Those Reasons Are Still Wrong!!!:
Last week I posted a rather scathing
diatribe, basically ridiculing the fact that Dick Bove get's so much MSM
airtime for his virtually consistently wrong calls and analysis:, as
excerpted: A BoomBustBlog Deep Dive on Dick
Dick Bove is one of the, if not most oft quoted sell side bank analyst
in the mainstream media. I disagree with him, regularly. As the uber
independent investor/analyst that I am, I will never be accurately
accused of kissing [up to] Dick - regardless, let's grab Dick by the base [of his assumptions] and see if we can yank something usable out of it, shall we?
Okay, I admit I was a bit harsh, and it
appears as if Mr. Bove may have read said diatribe and used his cache
with the MSM to post a response - very professional one at that - and
one to which I must give him credit - alas, he was still wrong! To wit:
With a month left in 2011 and—barring a miracle—bank stocks headed for a negative year, Dick Bove is admitting he was wrong.
This is both commendable and respectable.
It is honorable and healthy to admit when you are wrong, and we all have
the opportunity to do so since nobody is right all of the time!...
It is my belief that this country idolizes Wall Street, and does so
foolishly. Attempting a trade on Apple which is obviously on decline at
294 times leverage with no apparent risk management mechanisms rivaling
that of a mere eTrade account is silly, and does not connote "Masters of
the Universe" status. In closing, keep in mind that as I drove from my
apartment shortly after the Sandy storm, I noticed that the Goldman
Sachs HQ had lights and electricity almost immediately. Why? Because it
was triple sandbagged against the elements with underground vents
properly sealed. Notice that the surrounding hospitals and schools
failed to receive similar attention. Where exactly are our resourced
flowing and for what reason. Happy voting on this historical election
Subscribers expect fresh research and content later this week.