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Rochdale "Rogue Apple Trader" Arrested

Tyler Durden's picture




 

And so yet another saga of a trader who bet on AAPL rising, just before it tumbled, ends in tears, this time with what appears to be near certain incarceration of another small, 2-bit trader.

As we previously reported, back in November, as AAPL stock was in freefall, none other than the firm of everyone's favorite financial permabull, Rochdale, ended up being a proud if involuntary holder of nearly $1 billion in AAPL stock. The scapegoat for AAPL's price drop: one ex-trader David Miller. What Miller is accused of, is buying 1.6 million shares of AAPL on the day of the company's last earnings announcement in hopes, of course, the stock would surge. It didn't. Furthermore, Miller was in reality executing a trade for a client who had only wanted to buy 1,625 shares, but Miller was confident enough the stock would go up, he bet the firm's money to buy the difference. Sadly, neither the AAPL earnings announcement, nor its stock price, did quite as planned. End result: $5 million loss, Miller terminated and now arrested and charged, and Rochdale left scrambling for a bailout.

That's not all: as Dealbook reports, "Separately, Mr. Miller was talking to yet another brokerage firm, leading it to sell short or bet against Apple shares. This was done, according to the complaint, to hedge against his other position. Fortunately this brokerage house was able to trade out of the position at a profit. Mr. Miller, according to the complaint, had been planning this trade for some time and in the weeks leading up to Apple’s earnings he had made false representations to the brokerage firm that shorted the stock in order to help facilitate the trade." Miller then piled insult upon injury by lying, claiming he made a mistake in the order.

Of course, the reason why we italicized the word 'scapegoat' above is that had Miller's coin-toss proven accurate, and if AAPL had not posted its 3rd consecutive earnings miss in a row, and the stock had soared, he, his clients, and his firm would have all made lots money, Miller would now be expecting a fat 7 figure bonus, and Rochdale would not be in dire need of a rescuer (who refuses to come).

Alas, it, and everyone's favorite permabullish financial seer of seers, and the man who said to buy Lehman days ahead of its bankruptcy, is now left hanging, although as the NY Post reports, Rochdale rivals are "courting star analyst" Bove:

Bove is being courted by a bevy of rival firms with Rochdale teetering on the edge after it was rocked by $1 billion worth of unauthorized Apple trades.

 

The small brokerage, run by CEO Dan Crowley, blames a rogue trader, identified as David Miller, for making the massive bet without approval. The Federal Bureau of Investigation, along with regulators including the Financial Industry Regulatory Authority, are probing the matter.

 

Bove has pledged to stay at the firm while Crowley looks for a white knight willing to pony up $5 million or more to allow the Stamford, Conn., firm to continue operating as a broker-dealer.

 

If Rochdale, however, cannot find a cash infusion in the next few weeks, Bove will jump ship to another Wall Street firm, according to several sources close to him.

It is unclear just who this competing firm that will retain Bove's service is: the Home Shopping Network comes to mind.

Finally, one wonders just how close Messrs Miller and Bove were. According to Miller's FINRA dossier, his professional career is a mirror image of that of Dick himself. Was Miller merely expressing the bullish views of Mr Bove, whose permabullishness is usually amusingly contagious to those who know little or less about the true functioning of the financial world.

 

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Tue, 12/04/2012 - 17:57 | 3033646 JLee2027
JLee2027's picture

How is Rochdale still alive? Pull the plug! Or I guess margin calls no longer need to be met? Ever?

Tue, 12/04/2012 - 18:41 | 3033719 TwoShortPlanks
TwoShortPlanks's picture

I vood like toz velcome youz all to ze Newz Vorld Oderz...Pleasez, filez srough in an orzerly line to ze showerz.

Az zhere are hundredz and sousandz of peoplez needingz ze showerz, zhere may be a short vait of several hourz. Ve have provided zum light entertainmantz for you vhile youz vait. http://www.youtube.com/user/LeonardUlrich?feature=watch

Feelz free to upzdatez your fazbookz az diz iz de only zing dat iz freez in de Newz Vorld Oderz.

Tue, 12/04/2012 - 18:50 | 3033763 smlbizman
smlbizman's picture

5 million....u can get that out of the white house sofa....with the numbers passed around these days...i don't but i feel like i should have that...

Tue, 12/04/2012 - 19:27 | 3033831 Stoploss
Stoploss's picture

So, who ratted on the RAT??

Tue, 12/04/2012 - 17:57 | 3033650 alien-IQ
alien-IQ's picture

Meanwhile, Jon Corzine is free and laughing.

Amerikan justice in action (or should that be inaction?).

Tue, 12/04/2012 - 17:59 | 3033659 Catch-22
Catch-22's picture

Trader ?  ...traitor !

Tue, 12/04/2012 - 18:54 | 3033770 fockewulf190
fockewulf190's picture

I guess I´ve been desensitized to amounts of money such as $5 million.  When you hear nothing but billions and trillions as the new norm for everything from deficits to debt levels, takeovers to blown IPO´s and of course the famous national debt and the uncovered liabilities, $5 million sounds almost comical.  I picture Dr.Evil trying to look sinister as he tries to blackmail the UN for $1 million dollars and getting almost laughed at.  

Tue, 12/04/2012 - 19:42 | 3033872 El Oregonian
El Oregonian's picture

How's that saying go? "If you run with the Bulls, once in a while you're going to get gored".

Tue, 12/04/2012 - 18:43 | 3033745 yogibear
yogibear's picture

In this environment  I wouldn't be surprised if Obama appointed Corzine as a cabinet member. Turbo Timmy didn't didn't pay SS and Medicare taxes for three years until he got caught. Can't stop having cheats and criminals in charge of  US money. 

Tue, 12/04/2012 - 18:48 | 3033760 MillionDollarBogus_
MillionDollarBogus_'s picture

Corzine has powerful friends.  That's how he stays out of prison.

 

Tue, 12/04/2012 - 17:58 | 3033652 pods
pods's picture

How the hell did his 1.6 million share trade actually go through?  

That is a lot of dough!

pods

Tue, 12/04/2012 - 18:14 | 3033685 cougar_w
cougar_w's picture

I expect to see a lot of these "oopps my bad" excuses as companies hit the skids. Lehman was all good to go and trading like mo'fo's up until the last minute. If they had been on their game they would have executed a few "Hail Mary" trades at the end and either gone tits up with a "fat finger, oh no!" bad boyz style or won the lottery for themselves. And hey maybe there's even a bailout from The Fed, who knows?

It's other peoples' money. So what the fuck nobody will care, and if they do care they can get a bailout too.

Tue, 12/04/2012 - 18:21 | 3033697 Sancho Ponzi
Sancho Ponzi's picture

Check out his LinkedIn page, specifically the 'Viewers of this profile also viewed'

 

http://www.linkedin.com/pub/david-miller/49/a8a/454

Tue, 12/04/2012 - 18:26 | 3033707 cougar_w
cougar_w's picture

LinkedIn has softcore porn? Now that's a winning business model for the Interwebs!

Tue, 12/04/2012 - 17:59 | 3033653 Godisanhftbot
Godisanhftbot's picture

Where theres' one roach......

 

 Street filled with degenerate gamblers like this. They usually just lose their clients money. 

 No one is watching the store.

 

Tue, 12/04/2012 - 18:01 | 3033662 darteaus
darteaus's picture

These trades happened for the last 18 months.

When AAPL went up, mgmt. shared in the bonus pool, and looked the other way.

Tue, 12/04/2012 - 17:59 | 3033654 cossack55
cossack55's picture

Will he be going to bricks and mortar or an iprison?

Tue, 12/04/2012 - 17:59 | 3033655 So Close
So Close's picture

Would have loved to be a fly on the wall when that trade went bad.

Tue, 12/04/2012 - 17:59 | 3033657 darteaus
darteaus's picture

"WHAT!?  AAPL goes down?"

Tue, 12/04/2012 - 18:04 | 3033663 Pairadimes
Pairadimes's picture

Apparently Mr. Miller missed the orientation session where he would have learned that brokerage houses don't take the risks themselves, they fleece the risktakers in their customer base. That would have cleared up everything, and Mr. Miller would have avoided a series of very unfortunate encounters in the prison shower.

Tue, 12/04/2012 - 18:11 | 3033681 Yes We Can. But...
Yes We Can. But Lets Not.'s picture

Yeah, seeing Madoff naked is revolting, I am sure.

Tue, 12/04/2012 - 18:44 | 3033750 cougar_w
cougar_w's picture

I don't see how the guy gets any time, or even sees the inside of a courtroom. Someone with connections to Obama will place a phone call,"we really don't want this little guy giving testimony under oath", and he either has an accident involving a passenger train or he walks a free man. And if the latter then a $1M "thank you for your years of service" complimentary attache case of unsequential FRNs won't hurt.

Tue, 12/04/2012 - 18:02 | 3033666 azzhatter
azzhatter's picture

Has Bovine upgraded anything yet?

Tue, 12/04/2012 - 18:04 | 3033668 Quinvarius
Quinvarius's picture

The future of so many JPM PM shorts.

Tue, 12/04/2012 - 18:06 | 3033670 q99x2
q99x2's picture

U Wash Doggy might hire Bove to do a commercial. He could get a bath and make a few bucks as well.

Tue, 12/04/2012 - 18:11 | 3033671 falak pema
falak pema's picture

too small not to fail...

never understood how a guy who likes playing daddy long legs, hates being shorn of his denims making him into yodling Hans in leather summer shorts. If you like pants you like shorts; unless you have skinny legs! 

An for that you end up in jail! 

Shit!  long thick thighs. Any gals here who like short lederhosen?

Tue, 12/04/2012 - 18:07 | 3033672 Dr. Engali
Dr. Engali's picture

His problem is that he never bundled money for Oboma. If he had he would be called " the honorable Mr. Miller ".

Tue, 12/04/2012 - 18:08 | 3033674 cougar_w
cougar_w's picture

Thank God they went after the brutal financial terrorist, I hope they lock him away for eternity. This kind of deviant scum is a threat to democracy and our sacred American way of life.

Oh. Wait ... I thought this was something about Jon Corzine.

Fuck. Never mind then.

Tue, 12/04/2012 - 18:10 | 3033678 a growing concern
a growing concern's picture

On the one hand, I feel for the guy. I've been caught on the wrong side of a trade, and it's a pretty terrible feeling.

On the other hand, better get some soap on a rope, bitch!!!

Tue, 12/04/2012 - 18:12 | 3033683 orangegeek
orangegeek's picture

Apple is a member of the NASDAQ100.

 

http://bullandbearmash.com/saved-bundle-nasdaq100-apple-september/

 

Follow the indexes folks.

Tue, 12/04/2012 - 18:18 | 3033695 Seasmoke
Seasmoke's picture

The Apple music stopped and Miller was the poor sap who didn't have a chair. Time to start the phonograph again.

Tue, 12/04/2012 - 18:42 | 3033744 negative rates
negative rates's picture

If they can't get a bailout, it looks like the whole board room table is goin down. 

Wed, 12/05/2012 - 00:09 | 3034712 mkhs
mkhs's picture

Seasmoke,

Phonograph?  What the hell are you, a dinosaur?  Iphonograph.

Tue, 12/04/2012 - 18:22 | 3033698 blunderdog
blunderdog's picture

What was he arrested for?  Lying and doing stuff without his boss's approval was just the guy's JOB, wasn't it?

Tue, 12/04/2012 - 18:23 | 3033701 SilverIsKing
SilverIsKing's picture

Hard to tell if he really did what they said he did.  There's so much BS flowing out of WS now to cover up what others are doing, who really knows what the true story is.  Maybe he was told to place this bet and now he's taking the fall?  There could be someone more powerful and more connected who is pinning this on Miller.  WTF knows and WTF cares?

Tue, 12/04/2012 - 18:35 | 3033720 drivenZ
drivenZ's picture

yep, definitely Bernanke's fault. ha. These guys are like a 4th tier brokerage, there's probably no more than like 10 senior guys. Why would this guy take the fall for a two bit brokerage in CT? Sounds like this IS the true story. 

Tue, 12/04/2012 - 20:09 | 3033944 disabledvet
disabledvet's picture

There does seem to be a slight gap between "5 million" and "a billion." (about 995 million to be precise.)

Tue, 12/04/2012 - 18:24 | 3033704 drivenZ
drivenZ's picture

"white knight willing to pony up $5 million or more"

 

$5 million? If those guys can't muster up $5 million to save their firm then it's not worth saving.  

Tue, 12/04/2012 - 18:35 | 3033714 cougar_w
cougar_w's picture

I'm sure the lead partners in the firm blow that much on hookers and coke at Ibiza every summer.

Someone wants it dead. The books are probably cooked like Captain Hook. Skeletons piled high in every legal closet. Money laundering. Unpaid parking citations. The whole thing.

They'll pretend to give a shit to earn some credibility, and then do a Chapter 7 liquidation so fast it will make your eyes water.

Then back up the industrial-grade shredders boyz cuz this bitch is finished.

Tue, 12/04/2012 - 18:30 | 3033711 WezTheJuic
WezTheJuic's picture

Hmmmmm,

A blurp to please the public? Or a warning shot for the others?

Pens,

Tue, 12/04/2012 - 18:33 | 3033717 buzzsaw99
buzzsaw99's picture

he should have just front ran or bucket-shopped the 1625 shares like everyone else.

Tue, 12/04/2012 - 18:34 | 3033718 Yoann
Yoann's picture

something weird here

 

1.6 million shares -> 5 millions loss

He only lost a few $ on each apple share so ?

Tue, 12/04/2012 - 20:01 | 3033914 bdc63
bdc63's picture

he only had to lose 3 bucks per share to get to $5M

 

Tue, 12/04/2012 - 22:56 | 3034508 booboo
booboo's picture

yea, the brass won't be getting their 7 figure Happy Hanukkah bonus. Nothing meaner then a broke ass Jewish American Princess during shopping season. 

Tue, 12/04/2012 - 18:37 | 3033724 Samsonov
Samsonov's picture

No worries, the SEC is on the case.

Tue, 12/04/2012 - 18:45 | 3033751 yogibear
yogibear's picture

They'll get to it after reviewing all the new porn releases.

Tue, 12/04/2012 - 18:38 | 3033727 Poetic injustice
Poetic injustice's picture

Somehow those rogue traders are discovered right after favorite stock price drop.

Tue, 12/04/2012 - 18:40 | 3033735 bobthecat
bobthecat's picture

 

LOL, how can no one put up $5mill to fill the hole.  A more obvious question should be, how could this firm be allowed to put an order of $1bill through, if a $5mill hit has the possibility to take the firm under?  Even with margin, this is a f*cking joke.  I wonder what percent of the company you get for coming in with $5mill.   It's almost worth putting in the $5mill on the condition that Bove has to be fired.....

 

Tue, 12/04/2012 - 18:52 | 3033767 pan
pan's picture

So how are fanboys treated in jail?

Tue, 12/04/2012 - 19:17 | 3033807 ThisIsBob
ThisIsBob's picture

That trade is going to make money.  Patience, Grasshoppers.

Tue, 12/04/2012 - 19:30 | 3033845 Downtoolong
Downtoolong's picture

The really sad thing is if he had made the right call, he would have been championed as a financial mastermind, given a big bonus, and granted an exclusive interview by whatever hot babe reporter on CNBC he chose.  Because in the end, it’s not about morals, sound trading practices, client interests, fair markets, or any of that Pollyanna crap, is it? It’s simply about whether or not he made money. That’s all that really matters to these firms. To them, you’re only ever as good as your last trade.

Tue, 12/04/2012 - 19:47 | 3033884 rosethorn
rosethorn's picture

Yes, apparently the penalty for making a losing trade is arrest and incarceration.  Traders better get those trade orders in writing from their bosses.

Tue, 12/04/2012 - 19:31 | 3033846 Atomizer
Atomizer's picture

Oh where, oh where did my HarryWanker go? Oh where, can he be? 



Tue, 12/04/2012 - 19:48 | 3033886 NoDebt
NoDebt's picture

The notional value of the trade was around $1Billion.  Obviously done on margin (they don't have anything like a billion in the kitty).  But didn't they still have to clear the trade before they could sell out the next day or whatever?  I dunno.  I'm not a trader so I guess I don't understand the linkages.  Maybe $5MM is right.

Here's what really bothers me:  Bove has has been giving huge oral favors to the banks (in public!) for so long it's kind of odd they couldn't find somebody in the industry to pony up a lousy $5MM.  Yet nobody's stepping to the plate to help out their favorite media shill??  Nah.  I'm not buying the magic on this one.  Just seems like too much smoke here to only be one match head burning.

 

Tue, 12/04/2012 - 20:07 | 3033937 Cosimo de Medici
Cosimo de Medici's picture

Sins of the father, fella.  In your case, Dave, you are taking on the guilt of the entire industry.  You should feel proud for suffering as a proxy in lieu of Jamie or Lloyd.  Just think of yourself as a latter day Christ, suffering so that others can be saved.

"And on the third day, Dave got buggered in the shower".

It's positively........spiritual.

 

Tue, 12/04/2012 - 20:10 | 3033953 orangedrinkandchips
orangedrinkandchips's picture

how did it go through

how did he ONLY LOSE 5 MILLION for a 1.6MM share position AFTER EARNINGS???? 5BILLION?

Why is 5mm such a big deal for them? mom and pop shop? 5 million is pety cash, no?

 

Tue, 12/04/2012 - 22:47 | 3034464 logicalman
logicalman's picture

I doubt he'd have been arrested if his hunch had paid off.

Wed, 12/05/2012 - 00:52 | 3034778 silverserfer
silverserfer's picture

Rochdale Trader is REALLY..... Robottrader! I've found him!

Wed, 12/05/2012 - 01:06 | 3034801 PersonalRespons...
PersonalResponsibility's picture

Where is Robottrader anyway?  Fuck, I'll miss'm.

Wed, 12/05/2012 - 01:03 | 3034794 PersonalRespons...
PersonalResponsibility's picture

Just re-read it while listening to this, then it will all make sense:

http://www.youtube.com/watch?v=0laDzqdzoSU

 

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