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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JLee2027's picture

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

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.

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...

Stoploss's picture

So, who ratted on the RAT??

alien-IQ's picture

Meanwhile, Jon Corzine is free and laughing.

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

Catch-22's picture

Trader ?  ...traitor !

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.  

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".

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. 

MillionDollarBogus_'s picture

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

 

pods's picture

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

That is a lot of dough!

pods

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.

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

cougar_w's picture

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

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.

 

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.

cossack55's picture

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

So Close's picture

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

darteaus's picture

"WHAT!?  AAPL goes down?"

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.

Yes We Can. But Lets Not.'s picture

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

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.

azzhatter's picture

Has Bovine upgraded anything yet?

Quinvarius's picture

The future of so many JPM PM shorts.

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.

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?

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 ".

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.

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!!!

orangegeek's picture

Apple is a member of the NASDAQ100.

 

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

 

Follow the indexes folks.

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.

mkhs's picture

Seasmoke,

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

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?

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?

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. 

disabledvet's picture

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

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.  

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.

WezTheJuic's picture

Hmmmmm,

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

Pens,

buzzsaw99's picture

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

Yoann's picture

something weird here

 

1.6 million shares -> 5 millions loss

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

bdc63's picture

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

 

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. 

Samsonov's picture

No worries, the SEC is on the case.

yogibear's picture

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

Poetic injustice's picture

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

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.....

 

pan's picture

So how are fanboys treated in jail?

ThisIsBob's picture

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

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.