This is a slightly sad case. A man tried to pull a fast one as a trader inside a financial company. And as such things normally do, the fast one went wrong and he's now facing some very searching questions.
An unauthorized purchase of $1 billion in Apple stock cost Rochdale Securities LLC $5 million, and has led to the arrest of a former trader with the company.
David Miller was nabbed by the Federal Bureau of Investigation in connection with the fraudulent stock purchase, and was charged with wire fraud, according to Bloomberg. Miller appeared before U.S. Magistrate Judge Holly Fitzsimmons in Bridgeport, Conn., on Tuesday.
Another, excellent, description in here at Forbes. He bought a $billion's worth of Apple stock on the day the results were to be announced. He claimed it was for a customer. Hmm, well, OK, but the customer had actually ordered $1 million's worth. This is what is known as a "fat finger" mistake and they do in fact happen. And the company that allowed someone to make such a mistake does indeed usually cough up any losses....or keep any profits.
However, at the same time the same trader got another company to go short on $400 million's worth (rough numbers you understand) of Apple stock. By claiming that he had transaction powers over an account where he didn't in fact have such powers.
Apple's results are about to come out, we might think that the stock will move strongly one way or another. Our trader will make money on one or other of the accounts: and also lose on the other one. But that's the point: he's not trading with his money in either account. If he can get the profit out of whichever account does well then, well, who knows what he was thinking at this point?
The one little bit at the end that interests me. The firm he worked for lost $5 million on his long position in Apple: for the stock fell in value. They have to pay that loss, as they have. But the short position on 500,000 Apple shares in the other account: that would have gone into a very decent profit. And it would be very interesting indeed to know who gets that. Obviously it's not Miller, for you don't get to keep the profits from doing these naughty types of things. But will the company that conducted the trade keep the profit? Share it with Miller's erstwhile employers?
Does anyone actually know what happens here?
