A stock trader named David Miller with Rochdale Securities was arrested today on the grounds that he’d illegally purchased $1 billion in Apple stock, or 1.625 million shares, on the day Apple released its quarterly earnings in October. The idea was to do a quick sell-off when the stocks rose on Apple’s reported results, cash out and leave the firm’s cash reserves none the worse for wear. But that’s not what happened.
Instead, Apple stock actually dropped following the reporting of results. Apple stocks went down after hours and opened lower the next day based on the fact that the company had missed street estimates, in comparison to its usual trend of opening higher after an earnings call, which is the way things have happened over 25 out of the past 36 quarterly reporting periods, according to MarketWatch.
Since stock prices bucked the trend this time around, however, instead of a quick payday, Miller is now facing up to 20 years in prison. For his part, he claims that he intended to buy only 1,625 shares, but that multiples of the same order somehow went through resulting in the much larger 1.625 million share purchase. Rochdale is reportedly out $5 million as a result of the deal gone wrong, and is looking for a rescue via cash investment or merger with another brokerage, since the losses are actually more than it can cover while remaining solvent. Miller also apparently involved another broker in the same scheme through misinformation to help sell 500,000 shares, which likely doesn’t help his defense.
I think everyone learned an important lesson here today: Wire fraud, even when it seems like a lock based on strong historical precedent, probably isn’t the wisest use of your employer’s money.