Well-known permabull financial analyst Dick Bove lost his job in November 2012. Not due to his ineptness, but due to his Rochdale Securities colleague David Miller who today plead guilty to wire fraud and conspiracy over an epic Apple trade gone wrong. As Reuters reports, Miller faces a maximum 25 years (though is expected to suffer less) after falsely telling his bosses that he executed a 1,625 share trade for a client, when in fact he bought 1,623,375 shares of the 'never-gonna-fall' stock on the day of its earnings release (October 25th 2012). When the bet backfired, Rochdale was on the hook for the losses which led the firm to cease operations and to provide the market with a brief respite from Bove's 'loan-loss-provision'-ignoring, 'we're-going-to-the-moon-Alice' investment advice on US banks. What a difference a decimal place makes...
A former Rochdale Securities trader whose unauthorized purchase of about $1 billion of Apple Inc (AAPL.O) stock caused the demise of the financial services company pleaded guilty on Monday to wire fraud and conspiracy.
David Miller, 40, entered his guilty plea before U.S. Magistrate Judge Donna Martinez in Hartford, Connecticut.
Miller faces a maximum 25 years in prison when he is sentenced on July 8, but under a plea agreement he could receive a term of five to eight years. The Rockville Centre, New York resident is free on bond.
The U.S. Securities and Exchange Commission filed a related civil fraud lawsuit against Miller on Monday.
Prosecutors said Miller bought 1.625 million Apple shares on October 25, 2012, the day the maker of iPads, iPods and iPhones planned to report third-quarter results, hoping to profit if the company's share price rose.
But they said Miller falsely told Rochdale that the trade was for a customer that had in fact ordered just 1,625 shares.
When the bet backfired, Rochdale was on the hook for $5.3 million of losses on the extra 1,623,375 shares, leaving the Stamford, Connecticut-based company undercapitalized, the SEC said in court papers.
The SEC said as a result of Miller's bets, Rochdale ceased operations and its staff left or was fired in November 2012. On February 25, Rochdale asked Connecticut, the SEC and other regulators to withdraw its registrations.
At the time of the loss, Rochdale was the home of prominent banking analyst Richard Bove.
and a blast from the past for Dick from August 2008 (a month before Lehman) - though the list goes on...
"If you take a look at the structure of the banking industry right now, you will see there is more equity in the banks than their has been for the last couple of years; deposits are rising, reserves are higher, and their loan volume is growing. I would argue they are in pretty good shape.
You might see failures among the lowest 6000 banks but it won't have an impact on the system."
Full clip below: