Rogue Apple trade sinks Rochdale Securities
How could this have happened?
About a month ago, a trader at Rochdale Securities bought $1 billion worth of Apple stock--$1 billion! The kicker here is that he was not authorized to do so. He intended to buy 165,000 shares in an standard agency trade, but due to some sort of snafu, he ended up buying 1.65 million shares.
Unfortunately, those shares did not fare well after the purchase, and the bank lost millions. Making matters dire, the company only has $3.5 million in capital. After making the trade, the trader was apparently not seen again on the trading floor, according to media reports. In short order, the company, which is best known for employing the ubiquitous analyst Richard Bove, confirmed the loss and commenced an aggressive search for a capital injection. The FBI has now entered the fray, opening an investigation.
It may have been a fat-finger sort of mistake, but there is concern within the firm that it was rogue trading.
"While many details of the alleged scam are not yet known, the trader who purchased the Apple shares in question has been identified by sources as David Miller. Miller, a 20-year Wall Street veteran, has not been charged with any trading violations or any crimes," notes the New York Post. It alludes to scheme that had been underway for a while and involved at least on outside trader. If it was a scam, it will be interesting to see how it was supposed to work.
- here's the article