Trader Pleads Guilty To Illegal Purchase of Nearly $1B In Apple Stock 174
An anonymous reader writes "A trader who last year made an unauthorized purchase of nearly US$1 billion worth of Apple stock has pled guilty to wire fraud, securities fraud and conspiracy. On October 25, 2012 — the same day Apple posted its Q3 2012 earnings — David Miller of Rochdale Securities made a number of unauthorized purchases of Apple shares which ultimately led to the demise of the financial services firm he worked for. The aim of Miller's action was to make a lot of money very quickly by purchasing large quantities of Apple shares and selling them in a post-earnings surge."
Re:Worth it? (Score:5, Insightful)
I would be surprised if the plea agreement that is allowing him to only serve 5-8 years will allow him to keep any commissions he made on his fraudulent sales. Even without the plea agreement, I doubt he would keep any of the money.
I assume he will have to declare bankruptcy after the firm goes after all of his money to pay back some of their losses.
Re:Worth it? (Score:5, Insightful)
Is it worth throwing a minimum of 5-8 years of your life away for money?
Most people trade ~40 hours per week of their life for money. That adds up to 5-8 years after a while.
Re:So this is the plan... (Score:5, Insightful)
So in other words, just another day on the stock market...
Would they arrest him if he had won money? (Score:5, Insightful)
Color me skeptical, but for some reason I doubt that a trader who recklessly threw a billion dollars on the stock market roulette table and *won* would be outed by his firm and sent to jail. Rather, he'd be the "ballsy financial genius" who'd be in charge of $10 billion next time. And of course, this type of perverse incentive system only encourages the next thrill-seeking gambling addict to try their own play. A few years in a minimum security white-collar slammer, versus the chance to take your cut of zillions in winnings gambling on others' money? Sounds like a gamble far too many "I earned my position by skill, not chance!" scamming scum would take.
Re:Pure Stupidity (Score:3, Insightful)
Re: Would they arrest him if he had won money? (Score:5, Insightful)
Unauthorized? (Score:5, Insightful)
Erm. How does one spend ONE BILLION dollars unauthorized? Wouldn't the firm be at fault? Someone singularly has the ability to decide to spend a billion dollars on something?
Re:Worth it? (Score:5, Insightful)
"I doubt he would keep any of the money."
Keep WHAT money? He LOST on the stock market. He didn't make any money.
Re:Worth it? (Score:5, Insightful)
Is it worth throwing a minimum of 5-8 years of your life away for money?
Of course it is not worth it if you get caught.. But for most financial shenanigans, the chance of getting caught is pretty low. If enough other people are doing the same thing, there is safety in numbers, and instead of going to jail, you get a bailout. This guys problem was that he made a bet too big to go unnoticed, and he was very unlucky. He isn't being punished for making an illegal bet. He is only being punished for losing the bet.
Re:Pure Stupidity (Score:4, Insightful)
He is just lucky he didn't fileshare some tunes or a movie while doing it, then they could have locked him up and thrown away the key. Rip of a billion,well boys will be boys, but pirate a song FELON!!!
Re: from the original FBI press release: (Score:4, Insightful)
Miller convinced the broker-dealer to sell 500,000 shares of Apple stock, falsely claiming that he was trading for the account of a company, which he had no relationship with and for which he was not authorized to trade.
Re:Worth it? (Score:5, Insightful)
That's the rule according to the SEC, but the SEC has largely been gutted of power to closely monitor and regulate what actually goes on. This guy is going to jail because his own investment firm outed him. If you're an investment firm boss, and one of your employees just lost you millions, you'll gladly blame the loss on a rogue employee (not standard firm operating procedures). But what if you just made millions? Is this when you announce to the world "no, we're not an especially clever investment firm, we just have dangerous loose cannons at our trading desks who got lucky this time."? Or, do you cover for your employee's actions; give him a nice bonus to keep quiet, and retire from the firm to a nice island mansion; and shuffle paperwork to keep the trading off the SEC's radar?
Re:Worth it? (Score:5, Insightful)
The trade was unauthorized because the information about the bonuses was "privileged" information. The SEC operates its rules for trading on the premise that all investors should at least in theory have access to the same information at the same time. In this case the broker had knowledge of the information in the quarterly reports prior to a general public dissemination of the information, therefore he had a fiduciary responsibility to refrain from trades until the information went public.
This is one reason why "insider trading" is such a major crime, and what ultimately nailed Martha Stewart (particularly as she sat as a governor on the board of trustees for the NYSE). People in "high places" have a standard of responsibility that they should be following and it is stricter than what "ordinary" investors typically operate in. That they get time to think about the impacts of this information and can anticipate market moves by having access to such information makes it important to be much more cautious when acting upon such information.
When a large number of corporate officers start to sell off stock in the company they work for (or start buying it for that matter), it is usually considered something important to consider when investing into that company. It is assumed that those officers are acting on public information or that there are external reasons for those actions (such as personal bankruptcy or a windfall of money coming their way), but it can be due to confidential information that either hasn't or won't be publicly released. The SEC is not happy if that information is unjustly exploited and costs ordinary shareholders potential profit, which is where the crime actually happens.
Re:Worth it? (Score:2, Insightful)