Trader Pleads Guilty To Illegal Purchase of Nearly $1B In Apple Stock

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Trader Pleads Guilty To Illegal Purchase of Nearly $1B In Apple Stock

Posted by timothy on Tuesday April 16, 2013 @04:26AM from the teacher's-pet-in-overdrive dept.

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."

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I plead guilty by Anonymous Coward · 2013-04-16 04:29 · Score: -1, Redundant

To getting the first post! HAHAHAHA
what about the people who bought the stock? by alen · 2013-04-16 04:32 · Score: 2, Informative

oh wait
never mind
at least the Mac blogs i still read keep on pumping the stock
1. Re:what about the people who bought the stock? by MightyYar · 2013-04-16 07:46 · Score: 1
  
  Personally, I think it's a bit of a bargain right now. Timing the market is always kind of foolish, but this one is tempting.
  
  --
  W..w..W - Willy Waterloo washes Warren Wiggins who is washing Waldo Woo.
Pure Stupidity by VeryBest52 · 2013-04-16 04:33 · Score: 1, Flamebait

The stupidity of some people baffles me.

--
TheVeryBest
1. Re:Pure Stupidity by Anonymous Coward · 2013-04-16 04:53 · Score: 3, Insightful
  
  Given how rare prosecutions for financial crimes are and the enormity of the potential gains I'm not so sure.
2. Re:Pure Stupidity by Anonymous Coward · 2013-04-16 05:15 · 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!!!
3. Re:Pure Stupidity by Anonymous Coward · 2013-04-16 05:30 · Score: 0
  
  He is a nobody. He isn't politically connected and hasn't purchased influence, so why should anyone expect that he would have gotten off lightly?
4. Re:Pure Stupidity by Raistlin77 · 2013-04-16 10:56 · Score: 1
  
  Greed != Stupidity
  This is simple greed, not stupidity. And you can bet your ass that had his actions turned out to be profitable for the firm, we would never have heard about it.
5. Re:Pure Stupidity by lxs · 2013-04-16 18:31 · Score: 1
  
  He gambled and lost.
  If his gamble had worked he would have made a lot of money for the firm and he would have been a hero to his employer with a hefty bonus on top.
6. Re:Pure Stupidity by Plumpaquatsch · 2013-04-17 05:43 · Score: 1
  
  He gambled and lost.
  If his gamble had worked he would have made a lot of money for the firm and he would have been a hero to his employer with a hefty bonus on top.
  Looks like he gambled with his firms money, but intended to pocket the earnings. Even if it had worked, his company likely would have found out and sued him.
  
  --
  Of course news about a fake are Fake News.
7. Re:Pure Stupidity by Wovel · 2013-04-22 16:20 · Score: 1
  
  I think he was kind of stupid. He didn't know the earnings surge was built into the stock price before the announcement. That is stupid.
Worth it? by Anonymous Coward · 2013-04-16 04:34 · Score: -1

If he made $1m on commissions (easily)...
Would you go to jail for 5 years and walk out making $200k/year with $0 expenses?
1. Re:Worth it? by VeryBest52 · 2013-04-16 04:35 · Score: 2
  
  Is it worth throwing a minimum of 5-8 years of your life away for money?
  
  --
  TheVeryBest
2. Re:Worth it? by ranton · 2013-04-16 04:37 · Score: 4, 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.
  
  --
  -- All that is necessary for the triumph of evil is that good men do nothing. -- Edmund Burke
3. Re:Worth it? by magarity · 2013-04-16 04:38 · Score: 2
  
  If he made $1m on commissions (easily)...
  Would you go to jail for 5 years and walk out making $200k/year with $0 expenses?
  you forgot a minor point: he doesn't get to keep the money, he just gets the jail time.
4. Re:Worth it? by alen · 2013-04-16 04:38 · Score: 1
  
  no because you have to return the money and pay additional fines on top of the jail sentence in cases like this
  and you will never be able to work in finance jobs
5. Re:Worth it? by GameboyRMH · 2013-04-16 04:39 · Score: 1
  
  ME FIRST!
  
  --
  "When information is power, privacy is freedom" - Jah-Wren Ryel
6. Re:Worth it? by sexconker · 2013-04-16 04:39 · Score: 3, Funny
  
  Is it worth throwing a minimum of 5-8 years of your life away for money?
  Oh please, he's going to a white collar resort prison, not a federal pound-me-in-the-ass prison.
7. Re:Worth it? by magarity · 2013-04-16 04:39 · Score: 4, 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.
8. Re:Worth it? by Anonymous Coward · 2013-04-16 04:42 · Score: 0
  
  I have a job, you insensitive clod!
9. Re:Worth it? by Anonymous Coward · 2013-04-16 04:43 · Score: 0
  
  Is it worth throwing a minimum of 5-8 years of your life away for money?
  I had a job like that.
10. Re:Worth it? by femtobyte · 2013-04-16 04:48 · Score: 1
  
  You really think his trading firm would out him and send him to jail if he *made* money, instead of giving him a raise and a promotion?
11. Re:Worth it? by GameboyRMH · 2013-04-16 04:54 · Score: 1
  
  I have one like that right now...it's not so good with the money part though.
  
  --
  "When information is power, privacy is freedom" - Jah-Wren Ryel
12. Re:Worth it? by geek · 2013-04-16 04:58 · Score: 3, Informative
  
  Bankruptcy wont save him from court ordered restitution nor from unsecured liability. The scope of bankruptcy is actually pretty narrow. The public always seems to think "Ah fuck it I'll just file bankruptcy and 7 years later have a clean slate!" when the reality is very different. Typically people still have to pay back what they owe. Occasionally what they owe will be negotiated down so that they aren't living in a card board box but they can go decades before they get back on their feet and all the while some judge will be telling them how much they can spend on cereal and what type of car they are allowed to drive. It's not pretty.
13. Re:Worth it? by Anonymous Coward · 2013-04-16 05:04 · Score: 0
  
  I bet he earned close to that while he was employed at that firm be bankrupted.
14. Re:Worth it? by Anonymous Coward · 2013-04-16 05:05 · Score: 0
  
  Wow, an 8 year stint comes out to about 33.72 years of 40 hour weeks. If you could keep the money, it might just be worth it after all.
15. Re:Worth it? by Bigby · 2013-04-16 05:07 · Score: 2
  
  How was the trade unauthorized? At the SEC/Federal level or the company level? If it is the company, then there should be no jail time. It is the company's fault for allowing one individual do such a trade and the company should be punished by the SEC if it broke a trading rule. Just like companies own the Intellectual Property of employees, they should be owning the crimes by employees committed filling their job role.
16. Re:Worth it? by Jane+Q.+Public · 2013-04-16 05:08 · Score: 4, 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.
17. Re:Worth it? by ShanghaiBill · 2013-04-16 05:09 · 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.
18. Re:Worth it? by the+eric+conspiracy · 2013-04-16 05:12 · Score: 2
  
  Yes. Unauthorized large transactions = jail time. Win or lose.
  -- SEC, FINRA Enforcement Section
  http://www.finra.org/web/groups/industry/@ip/@reg/@notice/documents/notices/p038276.pdf
19. Re:Worth it? by geekoid · 2013-04-16 05:14 · Score: 2
  
  how much money? If it mean never needing to work again after 5-8 years, then maybe.
  
  --
  The Kruger Dunning explains most post on /. http://en.wikipedia.org/wiki/Dunning%E2%80%93Kruger_effect
20. Re:Worth it? by Citizen+of+Earth · 2013-04-16 05:15 · Score: 1
  
  Is it worth throwing a minimum of 5-8 years of your life away for money?
  If AAPL had gone up, the guy would be a conquering hero raking in $millions in surprise bonuses. It's the same method Dr. House used to avoid punishment. Too bad this guy didn't realize that Apple is out of steam.
21. Re:Worth it? by Synerg1y · 2013-04-16 05:16 · Score: 2
  
  HIs trading firm lost close to 6 million as a result of a trade that went bad for him that they did not authorize. They are probably the ones who reported him in the first place. All the other times he's done this, he's made money, but only for himself / accomplice.
22. Re:Worth it? by Anonymous Coward · 2013-04-16 05:16 · Score: 0
  
  They would keep the earnings and hopefully fire him.
23. Re:Worth it? by femtobyte · 2013-04-16 05:20 · 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?
24. Re:Worth it? by Teancum · 2013-04-16 05:21 · Score: 1
  
  You really think his trading firm would out him and send him to jail if he *made* money, instead of giving him a raise and a promotion?
  If it caused the company to go bankrupt in the process? Yes.
25. Re:Worth it? by evilmidnightbomber77 · 2013-04-16 05:24 · Score: 2
  
  Thanks - my current workplace is not QUITE as bad as prison.
26. Re:Worth it? by void* · 2013-04-16 05:25 · Score: 2
  
  I don't think this is true. It might be if his plan had been to let the company and/or the customer keep the profits - but his plan appears to have been to personally keep the profits, based on the article links. Given that, his company may well have been inclined to have him prosecuted even if the trades had resulted in profits.
  
  --
  
  Code or be coded.
27. Re:Worth it? by Anonymous Coward · 2013-04-16 05:26 · Score: 0
  
  some judge will be telling them how much they can spend on cereal and what type of car they are allowed to drive. It's not pretty.
  Still not that ugly. We can afford more mercy nowadays. In the ancient days when you were the equivalent of "bankrupt" and had nothing else left to sell and couldn't support yourself (no land), you sold yourself as a slave.
  Terrible maybe, but who would or could feed you for free? This was in the days where wheat yields were about 0.25 tonnes per hectare. Even in the 1800s yields were about 0.75 tonnes per hectare. In contrast now yields are 8 tonnes with some going even up to 15.
  It's no surprise the ancient laws against sexual promiscuity could be harsh - there was no decent birth control - who wants to keep having to feed and shelter someone else's children (especially if you're struggling to feed your own family)?
  I'm not optimistic like some who think there will be a "post scarcity" age.
28. Re:Worth it? by Anonymous Coward · 2013-04-16 05:26 · Score: 0
  
  allow him to keep any commissions he made
  Just a FYI, but you probably meant to say "profits", not "commissions". (The "house" makes the commissions, not the trader.)
29. Re:Worth it? by Dunbal · 2013-04-16 05:30 · Score: 1
  
  You all are assuming he made money on the deal. He bought at $600 prior to the earnings report, thinking the stock would go back up to $700. Instead, it tanked. Had the stock gone up I'm sure he would have been slapped on the wrist and told "don't do it again".
  
  --
  Seven puppies were harmed during the making of this post.
30. Re:Worth it? by Dunbal · 2013-04-16 05:31 · Score: 1
  
  Some people still think AAPL stock is a magical money making machine. I remember one guy on TV saying that now was the time to buy, when it was at $700. I wonder how that worked out for his followers.
  
  --
  Seven puppies were harmed during the making of this post.
31. Re:Worth it? by Teancum · 2013-04-16 05:32 · Score: 4, 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.
32. Re:Worth it? by Anonymous Coward · 2013-04-16 05:35 · Score: 0
  
  Bankruptcy wont save him from court ordered restitution nor from unsecured liability. .... Occasionally what they owe will be negotiated down so that they aren't living in a card board box but they can go decades before they get back on their feet and all the while some judge will be telling them how much they can spend on cereal and what type of car they are allowed to drive. It's not pretty.
  What you describe is typical for the 99%, but for the 1% doing a carefully planned/structured bankruptcy it's more like a minor inconvenience.
33. Re:Worth it? by chill · 2013-04-16 05:36 · Score: 1
  
  Option 3: Tell the SEC yourself and turn him in so he takes all of the blame. Considering the SEC can't unwind trades, the firm keeps the profits and doesn't have to pay the trader's commission.
  Maybe, MAYBE they get a fine, but considering the SEC would want to encourage the self-policing, I doubt it.
  
  --
  Learning HOW to think is more important than learning WHAT to think.
34. Re:Worth it? by BradleyAndersen · 2013-04-16 05:40 · Score: 2, Insightful
  
  Depending on where you live, you may be more valuable to the economy as a prisoner. For example, the US national average wage for 2011 is about $43,000, whereas California currently spends about $50,000 per prisoner.
35. Re:Worth it? by alexander_686 · 2013-04-16 05:41 · Score: 1
  
  Maybe - I have seen this activity up close. What is the difference between an aggressive successful trader and a rouge trader? Traders tend to be type A personalities who are always testing the boundaries and some of those are subjective. Have I seen successful traders fired for doing such things? Yes - but only at select firms. Others take the profits and let it slide.
36. Re:Worth it? by coinreturn · 2013-04-16 05:51 · Score: 1
  
  Thanks - my current workplace is not QUITE as bad as prison.
  Yeah, they ream us, but not literally.
37. Re:Worth it? by jopsen · 2013-04-16 05:52 · Score: 1
  
  That assume he gets to keep the commission, which I doubt... Granted he could hide it somewhere, but then he'll have to launder it afterwards, an act that also carries a potential sentence.
  
  Locking people up longer, isn't a solution, in the US you've already got more inmates per citizen than Stalin did... (no joke)
  This guy isn't dangerous, just give him 5 years of community service, and make sure that if he pays back in case he ever comes into sudden wealth.
  (And ofcourse make sure he doesn't get employed in the financial sector anytime soon).
38. Re:Worth it? by coinreturn · 2013-04-16 05:52 · Score: 1
  
  Some people still think AAPL stock is a magical money making machine. I remember one guy on TV saying that now was the time to buy, when it was at $700. I wonder how that worked out for his followers.
  He probably bought at $690 - that's why he was saying it was a buy at $700.
39. Re:Worth it? by Anonymous Coward · 2013-04-16 05:54 · Score: 2, Funny
  
  . What is the difference between an aggressive successful trader and a rouge trader?
  
  Oh, I know this one!! The rouge trader has a pinker face.
40. Re:Worth it? by alexander_686 · 2013-04-16 05:54 · Score: 1
  
  Doubtful. It sounds like the guy was trading on his firms accounts. Such people tend to be principal traders - i.e. no commission. The general rule is that they get to take home, as a bonus, 50% of the money they make for the firm. Thus the reason my he took a huge gamble with the firm's money.
41. Re:Worth it? by nedlohs · 2013-04-16 06:02 · Score: 5, Informative
  
  You have a very strange definition of "valuable to the economy".
42. Re:Worth it? by alexander_686 · 2013-04-16 06:06 · Score: 3, Informative
  
  Your a bit off base here. You are dead on the money about insider trading - but this is not about insider trading - this is about 3rd party trading - he was playing around with other's people money, hoping his gamble would pay off..
  It is very common to give control of a account to a 3rd party either a broker or a outside advisor. They theory is that they are professionals and can trade better then you can. When this happens, certain rules are put in place by the owner of the account. Do a stop loss here, only so much in speculative trading, etc. And it looks like he broke all kinds of rules here. Some accounts he was not even authorized to trade in.
  I am going to guess this is going to play out like Nick Leeson - another famous unauthorized trader.
43. Re:Worth it? by alexander_686 · 2013-04-16 06:07 · Score: 1
  
  And I kind of need to redact my statement - read up on this some more. Not a principal trader on his owns firm account. However, he was entitled to a cut of the profits, so probably was not motived by commissions - and more by wanting to hit one out of the ball park.
44. Re:Worth it? by nedlohs · 2013-04-16 06:11 · Score: 1
  
  When you are working as a trader for some "investment" firm the firm keeps the profits (and the losses) but most of your income is in the form of commissions or bonuses.
45. Re:Worth it? by nedlohs · 2013-04-16 06:17 · Score: 1
  
  Isn't that what commission means? If a sales person in a clothing store works on commission they get X% of their sales. If a trader works on commission he gets X% of the profits on his trades over some time frame.
  Since he clearly lost a fortune his commission would be 0 of course.
46. Re:Worth it? by Anonymous Coward · 2013-04-16 06:21 · Score: 0
  
  As Steve Jobs proved the chance of getting your financial shenanigans acted on is slight.
47. Re:Worth it? by Kaenneth · 2013-04-16 06:22 · Score: 1
  
  iTunes on the Steam store?
48. Re:Worth it? by gatfirls · 2013-04-16 06:33 · Score: 1
  
  Exactly. It like war. Only the losing side gets punished for crimes. If he had been on the winning side of the bet he would have been paraded around the office like a king.
49. Re:Worth it? by ranton · 2013-04-16 06:36 · Score: 4, Informative
  
  Typically people still have to pay back what they owe. Occasionally what they owe will be negotiated down so that they aren't living in a card board box but they can go decades before they get back on their feet and all the while some judge will be telling them how much they can spend on cereal and what type of car they are allowed to drive. It's not pretty.
  No, typically people don't pay back anything (or at least close to nothing). I know two people who have declared bankruptcy, and both of them discharged every penny of debt and kept every single possession (except one of them lost one of their cars). One kept a big screen TV and a living room set that they collectively owed over $3k for because it wasn't worth Best Buy's time to repossess items of such little value. I had read quite a bit about bankruptcy because he was asking advice before talking to a lawyer, and I was still surprised at just how easy the whole process was for him in the end.
  One was even able to run up an extra few thousand on his credit cards to stock up on non-perishable food and other household items (and do needed maintenance on the car he planned on keeping), and made sure not to contact a lawyer until a few months after doing it so he could claim to not know the bankruptcy court usually does not look further back than 6 months to detect such fraud (he never paid back a penny of it). I learned a lot about bankruptcy law while helping him prepare, and his lawyer did little more than back up what he and I had already learned online. The lawyer told him that the vast majority of bankruptcies are just as easy as his was (although that is just an anecdotal claim by his lawyer).
  
  --
  -- All that is necessary for the triumph of evil is that good men do nothing. -- Edmund Burke
50. Re:Worth it? by Anonymous Coward · 2013-04-16 06:37 · Score: 0
  
  Isn't that what commission means? If a sales person in a clothing store works on commission they get X% of their sales. If a trader works on commission he gets X% of the profits on his trades over some time frame.
  No, a commission is a percent of the sales as you say. Not a percent of the profit. Many brokers get a percent on sales even if they lose money.
51. Re:Worth it? by ranton · 2013-04-16 06:38 · Score: 1
  
  Keep WHAT money? He LOST on the stock market. He didn't make any money.
  The parent post claimed that he would make a lot of money off of his commissions regardless of the profitability of the trades. I don't know if that is accurate, but even if it is I was merely stating that he wouldn't get to keep any of those commissions.
  
  --
  -- All that is necessary for the triumph of evil is that good men do nothing. -- Edmund Burke
52. Re:Worth it? by Joce640k · 2013-04-16 06:39 · Score: 1
  
  Is it worth throwing a minimum of 5-8 years of your life away for money?
  Five years of my life in a cozy cell with three squares a day for $100 million? Where do I sign up?
  
  --
  No sig today...
53. Re:Worth it? by alexander_686 · 2013-04-16 06:47 · Score: 1
  
  AC is right - Commissions means you get paid either on the retail price or the volume of transactions. You don't care if you client makes money or the store makes money- volume is key.
  I don't know if trader got paid a commission or not - but he did get a slice of the profits. The idea is to align the broker's interest with the client's interest. Most brokers who operate under this principal get a very small part of their salary paid by commission and the majority of it paid by some kind of profit sharing.
  If commissions (i.e the number of transactions) was key he probably would not have made such a huge unidirectional bet on the market. There are "better" was to illegally churn an account then this. It souds like he was reaching for the fence, hoping for a home run, where everything would be forgiven.
54. Re:Worth it? by Bigby · 2013-04-16 06:49 · Score: 2
  
  I saw nothing about insider trading in the article. I work for a financial institution and having my management monitoring my financial statements makes me all too knowledgeable on insider trading monitoring.
55. Re:Worth it? by Kjella · 2013-04-16 06:52 · Score: 1
  
  Which is why you often find them doing black market work or other illegal activity, if it isn't official income just money in your pocket it's very hard for a judge to reach. Say you get hit with a Jammie Thomas verdict of 1.5 million dollars, even at a moderate 2% interest that's $30k before you even start making down payments and it'd take you 30 years to pay down at $50k/year and you're not going to have $80k in free post-tax income. People just give up permanently and make whatever they can on the side, even crap pay is better than good pay that's going straight down an endless hole. If you wanted more people to pay them back you need to give them some kind of incentive or a kickback for at least paying something back.
  
  --
  Live today, because you never know what tomorrow brings
56. Re:Worth it? by nedlohs · 2013-04-16 06:53 · Score: 1
  
  He's not a broker so how commission is calculated for a broker is irrelevant. Percentage of sales makes no sense for a trader, you aren't trying to motivate them to buy and sell their purchase limit in the same stock as many times as they can each day after all.
  A broker can't lose money on a sale - having them buy a stock for you earns them money, having them sell a stock for you earns them money. Out of that money they'll pay the broker his cut if he works on commission. The brokerage firm happen to call their cut "commission", but that's a very different usage of the word.
  For a broker or clothing sales person there is no difference between profit and sales anyway - it just means the percentage number is going to be different (to factor in the profit margin).
57. Re:Worth it? by the+eric+conspiracy · 2013-04-16 07:02 · Score: 1
  
  Tell that to all the people getting rung up for illegal trades recently.
  http://www.sec.gov/spotlight/insidertrading/cases.shtml
  http://www.sec.gov/litigation/admin/34-43270.htm
  http://en.wikipedia.org/wiki/2011_UBS_rogue_trader_scandal
58. Re:Worth it? by geek · 2013-04-16 07:03 · Score: 4, Informative
  
  The lawyer told him that the vast majority of bankruptcies are just as easy as his was (although that is just an anecdotal claim by his lawyer).
  No offense but you're entire post was anecdotal. I've dealt with dozens of people looking to do the same thing and its never worked out for them. Perhaps your state is more prone to this type of abuse, mine however is not. I can speak anecdotally also. I once looked into it myself during the dot com bubble crash. After speaking with several lawyers, I was informed by each and every one of them that I was fucked. I'm guessing that your friends situation was specific to your state.
59. Re:Worth it? by Firethorn · 2013-04-16 07:07 · Score: 2
  
  Let's round up to 10 years, just to make it easy. I currently work for less than $100k, but my quality of life is better than it would be in prison. Let's consider Prison in terms of something like working in a deployed/remote/somewhat hostile or dangerous location for extreme pay.
  If I could steal, say, $5M, successfully hide 2.5M, 'returning' the rest that I didn't 'gamble away' as a sign of regret, whatever, so I only get 10 years.
  $2.5M is $250k per year in prison, and assuming a 'moderate' 4% return while it's hiding in a Swiss or Caymen Islands account, it'll be $3.5M when I get out, giving me $140k/year to live off of, or almost double what I make now.
  In other words if you're going to steal, go large. It's not worth it for anything less than 'millions' for middle class and up types.
  
  --
  I don't read AC A human right
60. Re:Worth it? by operagost · 2013-04-16 07:15 · Score: 1
  
  Every time you hear a politician talk about the government "investing" in something, it's usually actually a loss. They gain reelection based on "broken window" fallacies.
  
  --
  
  Gamingmuseum.com: Give your 3D accelerator a rest.
61. Re:Worth it? by Atrox+Canis · 2013-04-16 07:17 · Score: 1
  
  There are two different types of bankruptcy that most private debtors go through. Chapter 7 of the bankruptcy code allows for most debts to be discharged but typically it is more difficult to qualify for that type of proceeding. Chapter 13 allows for restructured debt and in recent years, federal regulations make this the most common form allowed by bankruptcy courts.
  Perhaps your friends both qualified for Chapter 7.
  
  --
  Charter Member of The Committee Group For The Elimination And Eradication Of Repetitive Redundancy
62. Re:Worth it? by JavaTHut · 2013-04-16 07:22 · Score: 1
  
  "which ultimately led to the demise of the financial services firm he worked for."
  The company went bankrupt, which is as much as a company can be punished. Something this negligent requires punishment on both the individual and the company -- there just aren't enough consequences a company can impose on their employees beyond firing them to prevent something like this.
63. Re:Worth it? by nitehawk214 · 2013-04-16 07:34 · Score: 1
  
  Option 3: Tell the SEC yourself and turn him in so he takes all of the blame. Considering the SEC can't unwind trades, the firm keeps the profits and doesn't have to pay the trader's commission.
  Maybe, MAYBE they get a fine, but considering the SEC would want to encourage the self-policing, I doubt it.
  But the complete loss of the trading company's reputation evaporates; running them out of business anyhow.
  
  --
  I'm a good cook. I'm a fantastic eater. - Steven Brust
64. Re:Worth it? by femtobyte · 2013-04-16 07:35 · Score: 1
  
  So, lets see, in your examples, there's one big case (the UBS trader), another guy caught after *losing* giant chunks of money. The rest are "insider trading" cases, unrelated to the problem of policing crazy risky "unauthorized" trades within investment firms (and the associated types of fraud that the guy in the article got nailed for). Yes, the SEC can nail particularly stupid company insiders who tell their country club pals to buy right before the big corporate press release. However (and maybe I'm missing some in the giant laundry list of irrelevant examples you've provided), I don't see much evidence of ability to regulate (either by audits or firms turning in their own traders) against events like the one in this article (except where the gambler wins).
65. Re:Worth it? by jafac · 2013-04-16 07:44 · Score: 1
  
  The problem with these perversities, is that when it IS so easy for someone to get away with shit in bankruptcy, this triggers financial problems for their creditors; who had to eat that shit. It causes a chain reaction. So - while I am not really happy with the 2005 re-write of the bankruptcy code, in general - I think that there are plenty of cases where it didn't go far enough.
  
  --
  
  These are my friends, See how they glisten. See this one shine, how he smiles in the light.
66. Re:Worth it? by Dr_Barnowl · 2013-04-16 08:22 · Score: 2
  
  You're not discounting sleep. Lets assume you spend 8 hours unconscious a night. That may be generous, but you're also wasting time commuting, etc.
  Assuming neither prison, or your current job, count as "quality time", and you spend 8 hours a day working. (8 * 5 = 40). And assume that if you commit a white-collar crime with an 8 year sentence, you'll have sufficient capital to retire on, in a style that you'd enjoy.
  That leaves you with 8 hours quality time per day, which is really what you're giving up when you go to prison. Trade that for being able to have 16 hours quality time a day when you get out.
  Assume you do the crime at 30, and you would have worked to age 65, so 35 year span.
  16 * (35 - 8) = 432 (27 years of 16 hours a day quality time)
  vs
  8 * 35 = 280 (35 years of 8 hours a day quality time and 8 hours work)
  So you get MUCH more quality time until retirement age via the white-collar-crime method. The only possible downer is that you may value the time you spend between 30 and 38 more than the time you have later. The other factor would be that if you enjoy your job, you're giving up a lot of quality time.
67. Re:Worth it? by Anonymous Coward · 2013-04-16 08:24 · Score: 1
  
  This is one reason why "insider trading" is such a major crime, and what ultimately nailed Martha Stewart
  No. She got nailed with "lying to federal investigators". If she said she got some information that she should sell stock from her adviser, she would have got nothing. She wanted to protect the adviser, while the adviser sold her out in a plea bargain.
  The moral of the story, don't try to cover the ass of someone else or it will be you that will be shat on.
68. Re:Worth it? by ewibble · 2013-04-16 11:03 · Score: 1
  
  I throw away many more years than that going to work every day. At least he had a chance of not having to work again.
69. Re:Worth it? by countach · 2013-04-16 12:04 · Score: 1
  
  I don't think so. If some trader endangered my entire firm's existence with a rogue trade, I would fire him regardless if it all worked out. He must have had some plan to steal all the proceeds without them knowing.
70. Re:Worth it? by Anonymous Coward · 2013-04-16 12:38 · Score: 0
  
  Maybe you are not a crook and not trying to take advantage of the system. That does not mean others are not. My wifes co-worker has an illegal immigrant husband. She bought a house and car and had a lot of debt. She gave up paying for everything and her husband followed up and bought a house and car. They moved into that house and rented out their first house that was in default for well over two years until the renters were finally kicked out and they stopped paying rent. That rent money was paying for the mortgage on his house (along with about 6 other people living in it paying rent). Oh yeah, since her husband is an illegal, she files taxes as single head of household and claims both her kids. She gets all of her income tax back + EIC + food stamps + kids free lunch at school + her kids get free medical care. They are driving a 2011 Acura TL and a 2012 Tacoma pickup truck. They have both filed for bankruptcy in the last 5 years and they are somehow still able to buy houses and cars. Her sister bought a house and took some type of first time buyer tax break/credit and then rented it out to a group of people. She only made a few payments on it and it is in default and she is still collecting rent. She lives with her husband in the house he bought. I have no idea if they are paying for that or not. Both of them have filed for bankruptcy in the last 5 years as well. When you have very little ties to the area and to the society you live in, you don't care about being a responsible person. I have no doubt this pattern is repeated over and over again by the same people and many others. When all else fails, you just pick up and move somewhere else.
71. Re:Worth it? by LordLucless · 2013-04-16 12:40 · Score: 1
  
  Well, before being imprisoned he was a trader. If he does any productive work from prison at all, it's probably a net gain for the economy.
  
  --
  Just because you're paranoid doesn't mean there isn't an invisible demon about to eat your face
72. Re:Worth it? by mjwx · 2013-04-16 13:08 · Score: 1
  
  The lawyer told him that the vast majority of bankruptcies are just as easy as his was (although that is just an anecdotal claim by his lawyer).
  No offense but you're entire post was anecdotal. I've dealt with dozens of people looking to do the same thing and its never worked out for them. Perhaps your state is more prone to this type of abuse, mine however is not.
  An anecdotal prediction to the GP's anecdote.
  
  After 7 years you are allowed to borrow again, but you dont have a clean slate. That bankruptcy would be on their records for life, any semi-responsible lender would be very reluctant to lend to them again. Getting a car loan from all but the shonkyest of the shonky would be difficult and even after declaring bankruptcy, if you get any money you can still be sued for it. As another poster has said, the scope of a bankruptcy is very narrow.
  
  --
  Calling someone a "hater" only means you can not rationally rebut their argument.
73. Re:Worth it? by ranton · 2013-04-16 14:43 · Score: 1
  
  No offense but you're entire post was anecdotal. I've dealt with dozens of people looking to do the same thing and its never worked out for them.
  My experience was anecdotal, but there is plenty of statistics that back up that most bankruptcies are quite easy and almost everything is dischargeable.
  According to uscorts.gov the average bankruptcy has $115k in assets and $211k in liabilities. $202,361 of that debt is discharged on average, or almost 96%. That means in your average bankruptcy, someone who owes $211k will still owe $9000 by the end of the bankruptcy. That $9k is usually student loans, domestic support obligations, and taxes.
  People still lose any assets that they have significant amount of equity in, such as a house or car. But you can always keep a house or car if you don't have too much equity (less than $30k in your home equity for a couple in IL, $100k in CA).
  
  --
  -- All that is necessary for the triumph of evil is that good men do nothing. -- Edmund Burke
74. Re:Worth it? by ranton · 2013-04-16 14:57 · Score: 1
  
  Perhaps your friends both qualified for Chapter 7
  Yes they were both Chapter 7, the most common form of bankruptcy. 70% of bankruptcies are chapter 7, and 97% of these are non-business so business related bankruptcies are not skewing the numbers.
  
  --
  -- All that is necessary for the triumph of evil is that good men do nothing. -- Edmund Burke
75. Re:Worth it? by bryan1945 · 2013-04-17 04:22 · Score: 1
  
  Never been to jail, have you?
  
  --
  Vote monkeys into Congress. They are cheaper and more trustworthy.
76. Re:Worth it? by Anonymous Coward · 2013-04-17 09:11 · Score: -1
  
  Faggot.
77. Re:Worth it? by wisnoskij · 2013-04-17 12:48 · Score: 1
  
  Probably depends on the prison, and how much you dislike/like sodomy. But in my opinion, in general, I would rather go to jail for 5 years, then have a 9-5 boring job for 40 years, earning peanuts besides.
  
  --
  Troll is not a replacement for I disagree.
78. Re:Worth it? by wisnoskij · 2013-04-17 12:50 · Score: 1
  
  better than throwing away 40 for a shity retirement plan that your CEOs sell out from under you, while they buy themselves new 100 foot yachts with their bonuses.
  
  --
  Troll is not a replacement for I disagree.
79. Re:Worth it? by wisnoskij · 2013-04-17 12:56 · Score: 1
  
  And I think it really depends. They have books in Prison I think, and you gets load of opportunity for conversations and friends. You can even buy drugs, and I imagine liquor.
  So in some ways you are not that badly off.
  Depending on the book selection, I would not mind taking the next 8 years off to catch up on my reading.
  
  --
  Troll is not a replacement for I disagree.
So this is the plan... by gnasher719 · 2013-04-16 04:35 · Score: 2

Buy $1bn worth of shares in the name of your company. If it works out and the shares go up by one percent, sell them for $1bn and $10 million, take the $10 million, and run. If it doesn't work out, your company goes broke and you go to jail.
1. Re:So this is the plan... by cdrudge · 2013-04-16 04:42 · Score: 4, Insightful
  
  So in other words, just another day on the stock market...
2. Re:So this is the plan... by Anonymous Coward · 2013-04-16 05:06 · Score: 0
  
  I don't understand why this is illegal (*) when shorters do this for a living.
  * - not personally, but the money word operates under its own set of laws.
3. Re:So this is the plan... by Anonymous Coward · 2013-04-16 05:23 · Score: 0
  
  Its illegal because he cost the company that owns him money. Likely, the magical job creators have enough money to bribe politicians to make sure he goes to jail. Of course, now that the magical job creators are out of business, they can't bribe politicians. So basically, its illegal because politicians can no longer get bribes him the company.
4. Re:So this is the plan... by greg1104 · 2013-04-16 05:31 · Score: 2, Interesting
  
  He almost recreated the business model of every large bank. The missing step is that when you have a loss, you then ask for a bailout because it will hurt the economy if you fail.
5. Re:So this is the plan... by inode_buddha · 2013-04-16 05:42 · Score: 2
  
  Of course, the economic collapse and recession are due to those *eeeeeevil federal regulators forcing banks to make bad loans and not freeing the market to correct itself...
  
  --
  C|N>K
6. Re:So this is the plan... by nedlohs · 2013-04-16 06:18 · Score: 1
  
  If it works you get your X% of the profits for doing the trades - if they don't notice (or don't care) that you broke the rules anyway.
7. Re:So this is the plan... by nedlohs · 2013-04-16 06:25 · Score: 1
  
  No, it's illegal because his job allowed him to buy $X worth of stock (well the rules are going to be more complicated than that) and he bought >$X worth of stock. Same situation as if you work at the corner store and the owner tells you to buy 100 loafs of bread for today and you instead buy 200 because you think there will be lots of customers wanting bread.
  Financial markers are tightly regulated and so government enforcement tends to come into play in what in other fields would be a civil dispute.
8. Re:So this is the plan... by nitehawk214 · 2013-04-16 06:43 · Score: 1
  
  So in other words, just another day on the stock market...
  Except for the go to jail part. I guess someone richer bribed enough politicians to get this guy prosecuted.
  
  --
  I'm a good cook. I'm a fantastic eater. - Steven Brust
9. Re:So this is the plan... by poofmeisterp · 2013-04-16 06:51 · Score: 1
  
  Buy $1bn worth of shares in the name of your company. If it works out and the shares go up by one percent, sell them for $1bn and $10 million, take the $10 million, and run. If it doesn't work out, your company goes broke and you go to jail.
  Heh. I guess the pleasure his wife was giving him to encourage this behavior was too much - clouded his thought processes. Unprecedented lawsuit against her in 5....4....3...2..
10. Re:So this is the plan... by operagost · 2013-04-16 07:02 · Score: 1
  
  It's sad, because there are strategies that can get you money no matter what the stock does after an earnings report-- whether it goes up or down. But the modest return you get from such an option position isn't enough for the greedy.
  
  --
  
  Gamingmuseum.com: Give your 3D accelerator a rest.
11. Re:So this is the plan... by Hognoxious · 2013-04-17 23:47 · Score: 1
  
  are strategies that can get you money no matter what the stock does after an earnings report-- whether it goes up or down.
  Sure. Are there any that work if you don't know which, though?
  I don't see what I'm going to gain from simultaneously shorting a stock and holding a call option on it.
  
  --
  Confucius say, "Find worm in apple - bad. Find half a worm - worse."
Guilty of not being a CEO by Anonymous Coward · 2013-04-16 04:36 · Score: 0

Because then he would have gotten a reward instead of an investigation.
What if... by Anonymous Coward · 2013-04-16 04:38 · Score: 0

... he bought 1,623,375 iPhone instead?
1. Re:What if... by Anonymous Coward · 2013-04-16 05:44 · Score: 0
  
  ... he bought 1,623,375 iPhone instead?
  What if he did both? The extra orders would make the company look better, making his investment look better. Since you're probably doing it with OPM (Other People's Money) and just want to scam around, there are all kinds of reasons to do that. Start checking for warehouses in China full of brand new in-box product...
Tim Cook's fault by TimHunter · 2013-04-16 04:44 · Score: 3, Funny

Somehow this is Tim Cook's fault. Steve Jobs would never have let it happen. Also it proves the inherent superiority of Android over the iPhone. I just haven't quite figured out how yet. I'm sure somebody will, though.
1. Re:Tim Cook's fault by Anonymous Coward · 2013-04-16 04:57 · Score: 0
  
  Yep, And don't forget the arbitrary unrelated comment using (anti)religion / political rhetoric.
2. Re:Tim Cook's fault by Anonymous Coward · 2013-04-16 04:58 · Score: 0
  
  Well, when you figure it out, I'm certain the All-Seeing Disapproving Glare of Saint Jobs will disapprove of your heresy and unfaithfulness to The Apple.
3. Re:Tim Cook's fault by Anonymous Coward · 2013-04-16 06:45 · Score: 0
  
  Yep, And don't forget the arbitrary unrelated comment using (anti)religion / political rhetoric.
  My Republican God can troll better than this.
4. Re:Tim Cook's fault by TheColorTwelve · 2013-04-16 06:50 · Score: 1
  
  Somehow this is Tim Cook's fault. Steve Jobs would never have let it happen. Also it proves the inherent superiority of Android over the iPhone. I just haven't quite figured out how yet. I'm sure somebody will, though.
  I'll give it a try. The Android user probably would have bought put options instead?
5. Re:Tim Cook's fault by rvw · 2013-04-16 07:21 · Score: 1
  
  Somehow this is Tim Cook's fault. Steve Jobs would never have let it happen. Also it proves the inherent superiority of Android over the iPhone. I just haven't quite figured out how yet. I'm sure somebody will, though.
  In short: he needs a jailbreak!
Would they arrest him if he had won money? by femtobyte · 2013-04-16 04:44 · 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.
1. Re: Would they arrest him if he had won money? by UnknowingFool · 2013-04-16 04:51 · Score: 1
  
  That depends on his company. Some companies may be wary of a reckless attitude about financial regulations especially with what has happened in the last several years. He may have been fired anyway. Then again some other companies may have promoted him for bold initiative, but they would have had to cover him for his crimes if the SEC investigated.
  
  --
  Well, there's spam egg sausage and spam, that's not got much spam in it.
2. Re: Would they arrest him if he had won money? by mapsjanhere · 2013-04-16 04:54 · Score: 5, Insightful
  
  They would have laid him off with a golden parachute and a huge non-disclosure. Unauthorized high-risk trading is not something you let your investors know about, even if it went well. It shows your internal procedures lacking at the very least.
  
  --
  I'm aging rapidly, I bought a new game and had no idea if my machine was good for it.
3. Re:Would they arrest him if he had won money? by Jane+Q.+Public · 2013-04-16 05:06 · Score: 1
  
  This is a big problem with today's stock market (and its regulation).
  
  I mean sure, this guy was caught. But a lot of them have gotten away with a lot of things before they were caught. Simply because there is inadequate oversight.
  
  Too much speculation is not a good thing. Legitimate investment in a company can be a good thing. But there is no fundamental difference between stock speculation and gambling, except that the stakes are usually higher.
  
  I would remind people that the 2008 debacle was largely caused by irresponsible speculation and corruption (falsely valued derivatives, etc). Complete with government collusion (the problems with Freddie and Fannie).
4. Re:Would they arrest him if he had won money? by Anonymous Coward · 2013-04-16 05:16 · Score: 0
  
  Color you a fool then. Whether they win or lose, it's against SEC rules as well as the law (hence the wire fraud charge). All of these firms must submit to financial audits by outside firms like one of the big 4 as well as frequent SEC random audits, so even making money they would be caught. The SEC would revoke their license and send all of the partners to prison, and these days white collar crime is typically penalized not only with a jail sentence but also a fee of 1-3x the value of the fraud.
  As much as people are skeptical of the Wall Street folks and the 1%, the reality is the political people get voted in by the masses who are not Wall Street or 1%. The Sarbanes Oxley Act has substantially increased the financial penalties for white collar crime, while making all of it a criminal offense. Most white collar crimes these days involve a fine of at least 1x the damages caused, sometimes as much as 3x depending on how much can be accounted for, as well as a 5-25 years in prison.
5. Re:Would they arrest him if he had won money? by femtobyte · 2013-04-16 05:32 · Score: 1
  
  The fool is the one who thinks the SEC is capable of uniformly and comprehensively enforcing their rules, while being crippled by massive political pressure against regulation and managed by revolving-door Wall Street industry insiders. The fool also thinks that the "political people voted in by the masses" ever make it onto the election ballot without solid approval from the 1% (even if the 1% is divided on whether the (R) or (D) faction of the Oligopoly Capitalist party should win), or that their un-elected political appointees survive the confirmation process without passing the Disciples of Mammon religious tests.
6. Re:Would they arrest him if he had won money? by u38cg · 2013-04-16 05:39 · Score: 1
  
  If your risk controls work properly, you treat unauthorised wins as severely as you do losses. Unfortunately, that doesn't always happen. However, it does happen more often than you think - just with no attendant publicity.
  
  --
  [FUCK BETA]
7. Re:Would they arrest him if he had won money? by greg1104 · 2013-04-16 05:39 · Score: 1
  
  All of these firms must submit to financial audits by outside firms like one of the big 4 as well as frequent SEC random audits, so even making money they would be caught.
  (Snort) Right. Search for information about the SEC with keywords "revolving door" and "document shredding" added and you'll see how this really works. The big firms get busted by the SEC about as often as they are nailed for off-shore tax schemes--neither ever happen with enough impact to matter. The worst the SEC does is issue them a few million in fines, like the recent HSBC case, which are just lumped in as cost of doing business relative to the profits earned. This guy's problem is just that he was working for too small of a company to be playing the game he picked.
8. Re:Would they arrest him if he had won money? by alen · 2013-04-16 05:41 · Score: 1
  
  no, because any legit trade would also involve hedging in case of loss
9. Re:Would they arrest him if he had won money? by Teancum · 2013-04-16 05:52 · Score: 1
  
  I would remind people that the 2008 debacle was largely caused by irresponsible speculation and corruption (falsely valued derivatives, etc). Complete with government collusion (the problems with Freddie and Fannie).
  The fiasco in 2008 was due to the credit rating agencies over valuing the "safety" of the derivatives and other investments, claiming that they were rated as "AAA" or some other "safe" investment, when in fact they were more or less worthless (the term commonly used is "junk" status as in "junk bonds"). One of the reasons for this was because of an inappropriate relationship between the companies who were exploiting the inflated ratings on their debt instruments and the credit rating agencies, where the "investors" who were using the information from the rating agencies weren't really the customers paying for the ratings.
  Some of this can be blamed on the part of the investors involved, as they shouldn't be looking at "free" things given by brokers who are tweaking the numbers to extract more money from these investors. These investors should have been working together to independently evaluate these investments and really finding out how much they were worth rather than taking the word of a brokerage firm. In addition, much of the derivative market turned out to be a sort of Ponzi scheme simply disguised to look legal. That works fine for those early investors as they make a pile of money, but eventually somebody gets left holding the bad and screwed over in the end.
  There is nothing wrong with speculation in and of itself, as long as the people involved in making those investments are well aware of the risks involved. If this particular trader of the original story had risked $1 billion of his own money that he had obtained legally through other means and saw the whole pile of money disappear as a bad investment, the story would have ended right there. The problem was that he was risking $1 billion of other people's money that was given to him on a condition it would be used for much safer investments. That is where it turned into a criminal endeavor as he destroyed the fiduciary responsibility which was entrusted in him and violated the contract with the people depending on this trader.
  As for Fannie Mae and Freddy Mac, those organizations are also using "other people's money" and recklessly using it as well. The problem is that the "investors" are taxpayers who have the money taken from them at gunpoint anyway, so there is no fiscal responsibility other than to think they can take even more money at gunpoint from the same "investors" if they get into trouble. On the rare chance that Fannie Mae or Freddy Mac turn a profit, the profits disappear into the fiscal black hole known as the National Debt, so there is really no incentive at all to even be efficient or to consider the needs of their investors when making decisions. Such is the case for any government agency, so it isn't exclusive to just these two agencies.
10. Re:Would they arrest him if he had won money? by Anonymous Coward · 2013-04-16 05:58 · Score: 0
  
  Oh, how cute! Someone who believes the "a sufficiently complex bundle of securities turns gambles into sure gains" line! It's like inventing "free energy" machines by adding enough spinning magnets and armatures and escapements to thwart "conservation of energy" by sheer force of confusion. How are those Credit Default Swaps working out for you?
11. Re:Would they arrest him if he had won money? by femtobyte · 2013-04-16 06:06 · Score: 1
  
  "just with no attendant publicity," i.e. with no one getting arrested, and no troublesome SEC scrutiny. The perpetrator just gets a nice wad of shut-up money, and a glowing recommendation letter for a job at his boss' most hated competitor firm. Or, perhaps a new job as a congressional staffer advising on financial regulation.
12. Re:Would they arrest him if he had won money? by Jane+Q.+Public · 2013-04-16 06:12 · Score: 1
  
  "The fiasco in 2008 was due to the credit rating agencies over valuing the "safety" of the derivatives and other investments, claiming that they were rated as "AAA" or some other "safe" investment, when in fact they were more or less worthless (the term commonly used is "junk" status as in "junk bonds"). One of the reasons for this was because of an inappropriate relationship between the companies who were exploiting the inflated ratings on their debt instruments and the credit rating agencies, where the "investors" who were using the information from the rating agencies weren't really the customers paying for the ratings."
  That's called "corruption", which I believe I mentioned.
  
  "Some of this can be blamed on the part of the investors involved, as they shouldn't be looking at "free" things given by brokers who are tweaking the numbers to extract more money from these investors."
  Yes but. Yes they should have researched better, but they were being told by the "experts" that those were good investments. I don't think you can absolve the creators and raters of the derivatives from the vast majority of responsibility. After all, THEY did it on purpose. The others were victims.
  
  "There is nothing wrong with speculation in and of itself, as long as the people involved in making those investments are well aware of the risks involved."
  I should have worded more carefully. My point was that it is fundamentally no different from gambling. I don't think we are really disagreeing much here. What it is, is hard to dispute. But whether you think that is good or bad is a matter of opinion. Personally, I think it's bad because much of what the Government and the Fed falsely call "the economy" is dependent on nothing but a bunch of high-stakes gamblers who have proven over and over again to be grossly irresponsible and even criminal.
  
  "If this particular trader of the original story had risked $1 billion of his own money that he had obtained legally through other means and saw the whole pile of money disappear as a bad investment, the story would have ended right there."
  Yes, absolutely. He can gamble with his own money if he wants. But if a lot of people did the same thing, at the same time (which has happened in the past) it can still cause LOTS of harm.
  
  "As for Fannie Mae and Freddy Mac, those organizations are also using "other people's money" and recklessly using it as well. "
  Yes, precisely. But why? Barney Frank and friends, over the years, increasingly pushed F and F to lower their loan standards so more "poor people" could buy homes, eventually leading to a very large portion of their portfolios to be "sub-standard". And the market followed suit. Substandard became the new standard.
  
  So at least some of the blame can be traced straight back to Congress.
13. Re: Would they arrest him if he had won money? by poofmeisterp · 2013-04-16 06:53 · Score: 1
  
  That depends on his company. Some companies may be wary of a reckless attitude about financial regulations especially with what has happened in the last several years. He may have been fired anyway. Then again some other companies may have promoted him for bold initiative, but they would have had to cover him for his crimes if the SEC investigated.
  *rubs hands* Yes... sometimes laundering works veeeery well. Mwahahaha!
14. Re:Would they arrest him if he had won money? by poofmeisterp · 2013-04-16 06:54 · Score: 1
  
  Too much speculation is not a good thing. Legitimate investment in a company can be a good thing. But there is no fundamental difference between stock speculation and gambling, except that the stakes are usually higher.
  Could you *PLEASE* take this on with the oil industry?
15. Re:Would they arrest him if he had won money? by u38cg · 2013-04-16 07:00 · Score: 1
  
  Well, no. There may be a pay-off but it's unlikely you'd ever trade anyone else's money again. And if the risk controls are done right, then such actions are entirely transparent to the SEC.
  
  --
  [FUCK BETA]
16. Re:Would they arrest him if he had won money? by nitehawk214 · 2013-04-16 07:11 · Score: 1
  
  On the rare chance that Fannie Mae or Freddy Mac turn a profit, the profits disappear into the fiscal black hole known as the National Debt, so there is really no incentive at all to even be efficient or to consider the needs of their investors when making decisions. Such is the case for any government agency, so it isn't exclusive to just these two agencies.
  Oh it is much better than that. When Freddy and Fannie were making (virtual) profits in the late 90's and early 00's, they were taking the money and blowing it on useless projects such as E-Closing and Web based appraisal projects. None of these every provided any benefit to anyone other than the contractors being overpaid to develop the software.
  
  --
  I'm a good cook. I'm a fantastic eater. - Steven Brust
17. Re:Would they arrest him if he had won money? by Beorytis · 2013-04-16 07:25 · Score: 1
  
  You're probably right. It's a shame we can't give these jobs to monkeys. And put a 99% income tax on monkeys.
18. Re:Would they arrest him if he had won money? by Qzukk · 2013-04-16 07:31 · Score: 1
  
  Well, you know what they say: any sufficiently advanced securities are indistinguishable from magic!
  
  --
  If I have been able to see further than others, it is because I bought a pair of binoculars.
apparently he wasn't that good of a trader by Anonymous Coward · 2013-04-16 04:47 · Score: 0

From the article:
Later that day, Apple posted solid earnings, but as is typically the case after an earnings report, shares of Apple went down over the next few days.
Seems if he was worth anything as a trader he would have known this and thought up a better plan.
1. Re:apparently he wasn't that good of a trader by femtobyte · 2013-04-16 04:54 · Score: 1
  
  If all good traders knew this, then it wouldn't happen --- there'd be a rush to sell/short the stock, driving the price down *before* the earnings report. "Reliable rule of thumb" investment ideas like "Apple shares go down after earnings reports" always look great in hindsight --- until they don't.
2. Re: apparently he wasn't that good of a trader by UnknowingFool · 2013-04-16 05:07 · Score: 2
  
  For Apple and other companies the pattern has not been whether they had good earnings. It has been whether their earnings met some analyst's prediction. Many companies like Apple are very conservative about future earning estimates and so they lowball the amount. But in anticipation of this, an analyst will raise his/her estimate. I don't know how they come up with the numbers but some of them make no sense (like Apple selling more products after the holiday season than during it). Often what happens is the actual earnings is higher than Apple's estimate but lower than the analyst. So the stock takes a hit. Sometimes it is higher than the analyst estimate and then it goes up . . . until some other analyst makes a negative forecast for the next quarter.
  
  --
  Well, there's spam egg sausage and spam, that's not got much spam in it.
3. Re: apparently he wasn't that good of a trader by Teancum · 2013-04-16 06:04 · Score: 1
  
  The analysts try to use things like reported sales in trade journals and by 3rd parties like major retail chains (aka Wal-Mart, Target, Cosco, Best Buy, etc.) to try and anticipate independently what sales might be for a company like Apple. They might even conduct surveys of customers and ask customers if they've purchased electronic products recently, and if so what brands and items have they purchased. Much of this is even healthy in a market as it acts as an independent verification that the company is accurately reporting the information it is supposed to report. Sometimes these forecasts will simply be based upon reported sales of similar products that have happened in the past, thus the analysts are using some models that may or may not be accurate with what is actually happening today.
  In other words, analysts can legitimately anticipate what a quarterly report is likely going to say even before it is released based upon public information. Sometimes they are wrong, and a good analyst will try to re-evaluate their independent data sources and models if that happens too often.... or in some cases seek an audit of the company itself if they start to suspect that some mis-reported information is coming from "official" sources. It is highly unlikely that a company such as Apple is going to risk mis-reporting those kind of numbers though as it would land several Apple executives into prison for doing that kind of thing.... but it happens from time to time as well.
4. Re: apparently he wasn't that good of a trader by UnknowingFool · 2013-04-16 07:28 · Score: 1
  
  Well it seems that some analysts are not doin their jobs. For example, one lowered Apple stock to sell on the premise that Apple may not have a good Q2 because he heard from sources that Apple cut their orders for iPhone parts from Q1. Here's the part that is nonsensical: Apple's Q1 is the holiday season. Q2 is after. Apple cutting their orders after the holiday season should not be a surprise to anyone. Apple not selling as many iPhones should not be a surprise. Apple making less money after the holidays should not be a surprise. If they made less than the same quarter last year, that would be reason for concern.
  
  --
  Well, there's spam egg sausage and spam, that's not got much spam in it.
5. Re: apparently he wasn't that good of a trader by Teancum · 2013-04-16 09:02 · Score: 1
  
  Well it seems that some analysts are not doin their jobs.
  That is quite common. Most people are lazy, and stock analysts are no different.
  I heard of a really interesting scam idea related to this "forecasting" that seems so silly that it is amazing that it isn't more common. It goes something like this:
  An analyst sends out 100k letters (give or take) to a bunch of medium or high wealth clients. For about half of them, he forecasts that the stock market is going to soar, and the other half he predicts that the market will crash. By keeping careful track of who he sent letters to, whatever the market does, this "analyst" drops that half of the client list and only sends additional letters to the half that he "accurately" predicted. The "successful" half of the prediction pool of clients they do the same thing, about 25k that the market will soar and another 25k that the market will tank. Wash, rinse, repeat.
  After doing this a few times, by pure blind luck, this "analyst" has "predicted" the market successfully for some people over the past few months or even the past "year". He starts to charge "clients" a fee for successfully predicting the market in the future, and they start to believe him because he has been successful in the past. Obviously. As long as these "clients" don't talk to each other, he can keep doing these "predictions" until his coin flipping skills wash out and he has no more clients. Even if one or two of his "predictions" don't pan out, he can still claim a high prediction rate that might keep people paying for his service.
  Often I think many of these professional analysts are nothing more than a scam artist like I've described here. Flipping a coin on some stock and essentially saying patent nonsense. It is possible for a real analyst to put in some incredibly hard work to gather real data and to crunch numbers in a fashion that would offer real predictions, but that takes a whole bunch of effort and sometimes costs quite a bit of money (especially doing the surveys that I mentioned above). Your example here about ignoring seasonal sales from one quarter to the next is spot on for the kind of things that a real analyst needs to look for if they want to model their predictions accurately. You also have to know the product in terms other than just some numbers on a spreadsheet.... something these analysts also fail to do as well most of the time.
Diversified portfolio? by Anonymous Coward · 2013-04-16 04:49 · Score: 0

The poor bloke clearly hadn't heared about portfolio diversification.
Thank goodness by Anonymous Coward · 2013-04-16 04:50 · Score: 1

Thank goodness this would never happen with Bitcoin!
from the original FBI press release: by nimbius · 2013-04-16 04:54 · Score: 1

https://www.fbi.gov/newhaven/press-releases/2013/rochdale-securities-trader-admits-role-in-fraudulent-scheme-involving-nearly-1-billion-purchase-of-apple-stock

"This defendant participated in a fraudulent scheme in which he would either reap huge profits through the unauthorized purchase of approximately $1 billion of Apple stock or, if he faced huge losses, explain it away as simple human error"

how is this in any way different than regular financial trading? it seems to me the word 'unauthorized' was applied after the investment company decided this guy was a nuisance.

again:

"Risk is inherent in the investment world, but that risk should never be borne from the actions of investment professionals who choose to serve their own financial agendas rather than those of their client" stated FBI Special Agent in Charge Mertz.
if investment bankers didnt serve their own financial agendas im sure Lexus would be a far less profitable company and the hamptons would have a few less mailboxes. this guy wasnt arrested for anything as far as the FBI is concerned related to a specific SEC violation. i venture he was arrested for

--
Good people go to bed earlier.
1. Re:from the original FBI press release: by Anonymous Coward · 2013-04-16 05:09 · Score: 0
  
  Come on, don't leave us hanging!
  
  i venture he was arrested for being an apple fanboy
  
  Ahh, that's better.
2. Re: from the original FBI press release: by UnknowingFool · 2013-04-16 05:16 · Score: 3, Insightful
  
  Most likely the unauthorized part had to deal with the size of the purchases. A trader does not have unlimited buying power. He could bankrupt the whole company (which he did). He worked with an accomplice to make purchases he should not have been allowed to make. Also the FBI noted.
  
  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.
  
  --
  Well, there's spam egg sausage and spam, that's not got much spam in it.
3. Re:from the original FBI press release: by PhamNguyen · 2013-04-16 05:28 · Score: 2
  
  I agree that it's suspicious the way things suddenly become "crimes" once companies don't approve of them. However there do seem to be distinctly criminal elements to what this trader did: taking very deliberate actions to invest money in an unauthorized way, making trades on behalf of a non-existent client. So I believe this case truly is a criminal matter. On the other hand, I doubt that it would still be considered if someone higher up had done the same thing (using more complex excuses to cover up their actions).
4. Re:from the original FBI press release: by u38cg · 2013-04-16 05:41 · Score: 1
  
  Traders have limits they cannot (well, should not) breach. And normally, you'd hedge your exposure as well, so you're not just exposed to the stock going up in smoke.
  
  --
  [FUCK BETA]
At a loss by Anonymous Coward · 2013-04-16 05:00 · Score: 0

I'm at a loss to imagine how these idiots thought this was going to work. No one is going to miss a $1 Billion transaction. Maybe they thought their bosses might overlook it if they made a hefty profit. I'd love to have seen the looks on their faces turn from worry to terror as the stock prices fell after the earnings report came out and they realized they weren't making money, but loosing it hand over fist. In the end the firm lost over $5.3 Million according to the article. Could have been worse though, Apples stock price overall continued to fall from that then till now.
Not quite big enough... by Jawnn · 2013-04-16 05:07 · Score: 1

...to not fail, apparently.
Unauthorized? by DarthVain · 2013-04-16 05:08 · 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?
1. Re:Unauthorized? by Anonymous Coward · 2013-04-16 05:24 · Score: 0
  
  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?
  Not only was he able to purchase one billion dollars worth of stock, but did so at a company that went out of business due to a 5.2 million dollar loss.
2. Re:Unauthorized? by Anonymous Coward · 2013-04-16 06:00 · Score: 1
  
  A trader, who is allowed to execute trades, and has all the machinery to do so at his disposal, sends out orders to buy one billion dollars of stock and relies on the settling period, which I believe is three days (may be five). So, the money doesn't actually have to trade hands for three days. He was hoping he could sell the stock before the settling period expired.and make a profit. That way he never had to deliver any money, only collect the profit. Unfortunately he lost money and his firm had not authorized him to spend that much money in that way. (He may well have been authorized to trade tens of millions of dollar, so he just made multiple trades.) And yes, the firm was on the hook because he was trading on the firm's account.
3. Re:Unauthorized? by afidel · 2013-04-16 06:22 · Score: 2
  
  Usually it's because the trader has a set pot of money to trade with and certain risk limits he is supposed to adhere to but the actually trading system does not have business logic rules to enforce these limits because it would slow down trading too much. Basically the whole infrastructure of the big financial firms are setup to accommodate risky day trading instead of sound business investments like any other business would expect. Basically trader desks resemble video poker terminals more than they do the research desk at Berkshire Hathaway. It's a direct result of the focus on the immediate value of a commodity instead of the long term value of the company backing that commodity. Some economists say this is a good thing as it adds liquidity to the market and aids in price discovery, I think they're full of hogwash and need to look up from their textbooks and dissertations a bit more often.
  
  --
  There are 4 boxes to use in the defense of liberty: soap, ballot, jury, ammo. Use in that order. Starting now.
4. Re:Unauthorized? by drinkypoo · 2013-04-17 00:59 · Score: 1
  
  Some economists say this is a good thing as it adds liquidity to the market and aids in price discovery, I think they're full of hogwash and need to look up from their textbooks and dissertations a bit more often.
  It would be a good thing if we had a social safety net, but without it society is not necessarily served when even a fairly evil company is put out of business, and its employees wind up back on an already-full job market.
  
  --
  "You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
5. Re:Unauthorized? by Anonymous Coward · 2013-04-17 02:02 · Score: 0
  
  How does one spend ONE BILLION dollars unauthorized?
  He extorted it off the UN by threatening to cause all the world's volcanoes to simultaneously erupt!
6. Re:Unauthorized? by Rich0 · 2013-04-17 06:17 · Score: 1
  
  A trader, who is allowed to execute trades, and has all the machinery to do so at his disposal, sends out orders to buy one billion dollars of stock and relies on the settling period, which I believe is three days (may be five).
  Yes, we know what he was trying to do. The question is how the firm let it happen in the first place.
  If I go into the expense system at my employer and punch in that I spent one billion dollars out-of-pocket on inkjet toner the system will not just mail me a check for a billion dollars. Such a transaction (even if legitimate) would go all the way up to the CEO for approval, along with checks for compliance with purchasing rules/etc. The system is likely capable of printing any figure on the check the company wants, but it is designed with safeguards so that ordinary employees can't go spending arbitrary amounts of money. If I said I bought $50 worth of printer toner then most likely it would just mail me a check and if I didn't turn in the receipts they'd deal with it after-the-fact.
  The problem with trading firms is that they spend other-people's-money. That means that they only care about having procedures on paper - they could really care less about what happens to their clients. Oh, sure, they want to preserve their reputations, but only so that they can make more money off of other-people's-money. If this guy had made millions instead of losing it he'd have gotten a promotion (as long as the firm got their cut).
Eh, this is what happens by fustakrakich · 2013-04-16 05:13 · Score: 1

The small fry is trying to play a big boy's game, and he picked the wrong target.

--
“He’s not deformed, he’s just drunk!”
wait, what? by slashmydots · 2013-04-16 05:21 · Score: 1

How is it even possible to unauthorizedly purchase stock? That sounds almost as impossible as me R-ing TFA lol. Stock either is for sale or isn't and it's all checked by computers. You can't just go to ebay and buy something that's not there and I thought stocks were the same.
1. Re:wait, what? by Anonymous Coward · 2013-04-16 05:29 · Score: 0
  
  I think he purchased Apple stock that was for sale, he just wasn't authorized by his client/company to purchase the stock on their behalf.
2. Re: wait, what? by UnknowingFool · 2013-04-16 05:30 · Score: 3, Funny
  
  I think the amount of stock/transaction was unauthorized. There are usually safeguards in place so that a rogue trader doesn't purchase a gazillion dollars of stock that his company cannot cover. He worked with an accomplice to somehow get around those safeguards.
  
  --
  Well, there's spam egg sausage and spam, that's not got much spam in it.
trading is pseudo science by Anonymous Coward · 2013-04-16 05:24 · Score: 0

I am a financial engineer and also a PhD in science, so I can tell you that trading is a pseudo science. It is very hard to distinguish real profit from the noise. Most big guys that you see making lots of money would have made zero money if they had to pay the same commission and fees as individual day trader. The big guys make money in commission, fees, private placement, special offering, mergers and so on. As this article show, the top hedge funds managing $2.6 trillion actually made less than market returns for the last 4 years. Since they charge 2% asset management fee plus 20% commission, the net proceeds they pocketed equaled hundreds of billions of dollars and that is for doing worse than passive investing. Personally, I would never invest in any actively managed funds.
1. Re:trading is pseudo science by nitehawk214 · 2013-04-16 07:21 · Score: 1
  
  a PhD in science
  Any in particular... or you are a "student of all sciences" like Doc Brown? :)
  
  Personally, I would never invest in any actively managed funds.
  I remember reading somewhere that the index funds almost always beat the active managed funds. This is because the index funds charge lower fees, and the managed funds do not make enough more than the index to cover their own fees.
  
  --
  I'm a good cook. I'm a fantastic eater. - Steven Brust
2. Re:trading is pseudo science by sir-gold · 2013-04-16 07:51 · Score: 1
  
  The craziest thing about stock trading as pseudo science is that it doesn't matter. On a system that is mostly human-driven, the simple fact that everyone is using the same pseudo science (same algorithms) creates self-fulfilling "prophesies", forming a feedback loop which confirms the pseudo science.
  The system only works because everyone follows the same sets of rules, but the ACTUAL rules themselves don't really matter (much like language, it doesn't matter what the words actually sound like, as long as we all agree on the same set of rules).
3. Re:trading is pseudo science by ChrisMaple · 2013-04-16 13:36 · Score: 1
  
  There are a variety of problems with doing what everyone else does, especially for short term trades. If everyone is buying, then selling, you have to get there first or you lose money instead of making it. Another problem is that things work until they don't: many price pattern methods that worked splendidly until about year 2000 now are break-even or worse. Yet another problem is that even systems that are fundamentally sound are subject to what appears to be randomness: that good system can have a losing streak that wipes you out.
  Worse, not everybody uses the same rules, and some people are subject to panic. Bad news can break any system, too quickly to react.
  
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  Contribute to civilization: ari.aynrand.org/donate
did I read that correctly? by Anonymous Coward · 2013-04-16 05:37 · Score: 0

"Some companies may be wary of a reckless attitude about financial regulations especially with what has happened in the last several years."
are you suggesting that the last several years are serving to _DISCOURAGE_ reckless behavior in the financial sector?
wow...
Trading Places by JonahsDad · 2013-04-16 05:37 · Score: 3, Funny

I was going to suggest that the trader stick to frozen concentrated orange juice, but I see that it was down that day too, so it wouldn't have worked.
minus 5, Tr-o7l) by Anonymous Coward · 2013-04-16 06:20 · Score: -1, Redundant

FUCKING USELESeS
Blue Horseshoe Doesn't Love Apple by Anonymous Coward · 2013-04-16 06:26 · Score: 0

Blue Horseshoe Doesn't Love Apple.
Trader's fault... He really needed to call The Wall Street Chronicle first.
Why is it illegal? by Anonymous Coward · 2013-04-16 06:43 · Score: 0

You don't really explain. I can see the company being upset at him for buying something he shouldn't. But why is this against the law?
In your example: The boss of a corner store tells an employee to buy 100 loaves of bread from the bakery, because that's how much he expects to sell. You buy 200 loaves of bread, and 100 of them go stale. The owner has every right to be angry, and possibly to fire you for costing him money. However, you will not be going to jail, because you have done nothing illegal.
So: what is illegal about buying securities that your bank didn't authorize you to buy?!?!
1. Re:Why is it illegal? by mbkennel · 2013-04-16 10:56 · Score: 1
  
  "So: what is illegal about buying securities that your bank didn't authorize you to buy?!?!"
  It's illegal because banks own the government. Defrauding a baker is a civil action, defrauding a banker is a Federal crime.
Impressive by sir-gold · 2013-04-16 07:35 · Score: 1

You know you have screwed up on a truly grand scale when you not only end up in prison (which isn't particularly hard nowadays), but also manage to completely destroy the company you work for, all in the same step. (Impressive for a non-executive anyway, CEOs do this sort of thing on an almost daily basis)
1. Re:Impressive by burning-toast · 2013-04-16 09:05 · Score: 1
  
  (Impressive for a non-executive anyway, CEOs do this sort of thing on an almost daily basis)
  I share your sense of awe with how fluidly this guy destroyed his life and his employer's business. If not just slightly more of a cynical take.
  Someone should start the Darwin awards for businesses and their crappy employees for stories such as these. Unfortunately, unlike their human counterparts, they can resurrect infinitely many times from the grave and can replicate at-will so long as someone somewhere senses that there is money to extract and lives to ruin in them.
  Scratch that. Someone just needs to come up with a way where corporations can be exterminated permanently, their assets released into the public, their business licenses incinerated, their responsible parties (CXO class) no longer able to hold a position of responsibility anywhere within the same industry for life and their legal team disbarred (on GP). If a company causes mass damage to society then it should require forfeiting equivalent+ assets (IP, patents, etc) back to society in return.
  Personally, I'm not anti-corporate (believe it or not) and I do believe that corporations have a useful function and purpose, but I do believe that corporations should be just as mortal as the people who are victimized by them when they are mismanaged. (Monsanto, here's looking at you).
  - Toast
Old-fashoned by Pharoah_69 · 2013-04-16 07:58 · Score: 1

I make money the old-fashioned way, I mune it.
He bankrupted the trading company? by jonr · 2013-04-16 08:28 · Score: 1

Seems like he did us a favor...
How often does this happen? by Anonymous Coward · 2013-04-16 16:07 · Score: 0

I mean this isn't the first time.
half a percent... by Anonymous Coward · 2013-04-16 22:54 · Score: 0

He was able to buy $1 billion worth of stock, the eventual loss for the firm was $5 million, which is half a percent of the invested amount... and they go under?? Their capitalization was less than 1:200?...
Solution by NewYork · 2013-04-17 16:10 · Score: 1

Put a cap on market capitalization of big/listed companies

--
Casteism