Feeds

Rogue trader gets 2½ years for BILLION-dollar Apple share plot

Bad bet on fruity firm's stock price throws spanner in illegal scheme's works

Top three mobile application threats

A rogue trader has been sentenced to 30 months in prison for his scheme to profit from an unauthorised purchase of a billion dollars of Apple stock.

The doomed plan – which eventually led to David Miller's employers being forced to put their biz up for a merger or fresh investment – was to buy millions of Apple shares on 25 October, 2012 – the same day the company planned to report its third quarter results. The expectation was that the fruity firm's share price would go up after the announcement.

According to prosecutors, Miller was working at Rochdale Securities LLP when he conspired with another unnamed individual to buy the stocks illegally on behalf of one of his customers. The co-conspirator agreed to write an order for 1,625 Apple shares in a way that Miller could later claim he misinterpreted.

Miller would then buy a thousand times the number of shares – that is, 1,625,000 – and if the trade was profitable, he and his accomplice would split the profits. However, if it turned out to be a bad bet, Miller would claim he'd made a mistake, leaving Rochdale with the losing position.

When Apple announced its earnings, the stock price started falling. Miller put his Plan B into action and claimed he'd mistakenly ordered too many shares, leaving Rochdale holding around 1.6 million Apple stocks. Trading out of that position caused the securities firm to suffer a loss of $5.3m – at which point regulatory requirements stopped it from continuing to buy and sell stocks, effectively killing the business.

While all this was going on at Rochdale, Miller had also convinced another unnamed broker to take on a short position in Apple stock – selling shares in the hope of buying them back at a lower price – to hedge against his scheme at Rochdale falling apart. He falsely claimed that he was trading for the account of a company that was not a customer of his and got the dealer to short 500,000 Apple shares. Although the unnamed broker was at risk of big losses, he/she was the lucky one since the bet paid off, leaving him/her with a profit.

Miller was arrested in December last year and pleaded guilty to one count of conspiracy and one count of wire fraud. As well as the two-and-a-half years in jail, followed by three years of supervised release, Miller has also been ordered to make full restitution to Rochdale. ®

Combat fraud and increase customer satisfaction

More from The Register

next story
Lavabit loses contempt of court appeal over protecting Snowden, customers
Judges rule complaints about government power are too little, too late
Don't let no-hire pact suit witnesses call Steve Jobs a bullyboy, plead Apple and Google
'Irrelevant' character evidence should be excluded – lawyers
Record labels sue Pandora over vintage song royalties
Companies want payout on recordings made before 1972
EFF: Feds plan to put 52 MILLION FACES into recognition database
System would identify faces as part of biometrics collection
Edward Snowden on his Putin TV appearance: 'Why all the criticism?'
Denies Q&A cameo was meant to slam US, big-up Russia
Systems meltdown plunges US immigration courts into pen-and-paper stone age
Massive outage could last four weeks, sources claim
Ex-Tony Blair adviser is new top boss at UK spy-hive GCHQ
Robert Hannigan to replace Sir Iain Lobban in the autumn
Judge halts spread of zombie Nortel patents to Texas in Google trial
Epic Rockstar patent war to be waged in California
US Supreme Court supremo rakes Aereo lawman in oral arguments
Antenna-array content streamers: 'Ruling against us could dissipate the cloud'
prev story

Whitepapers

Mobile application security study
Download this report to see the alarming realities regarding the sheer number of applications vulnerable to attack, as well as the most common and easily addressable vulnerability errors.
3 Big data security analytics techniques
Applying these Big Data security analytics techniques can help you make your business safer by detecting attacks early, before significant damage is done.
The benefits of software based PBX
Why you should break free from your proprietary PBX and how to leverage your existing server hardware.
Securing web applications made simple and scalable
In this whitepaper learn how automated security testing can provide a simple and scalable way to protect your web applications.
Combat fraud and increase customer satisfaction
Based on their experience using HP ArcSight Enterprise Security Manager for IT security operations, Finansbank moved to HP ArcSight ESM for fraud management.