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Trader Pleads Guilty To Illegal Purchase of Nearly $1B In Apple Stock
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."
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
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.
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.
So in other words, just another day on the stock market...
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.
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.
Given how rare prosecutions for financial crimes are and the enormity of the potential gains I'm not so sure.
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.
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?
"I doubt he would keep any of the money."
Keep WHAT money? He LOST on the stock market. He didn't make any money.
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.
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!!!
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.
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?
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.
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.
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.
You have a very strange definition of "valuable to the economy".
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.
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
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.