Trader gets 30 months in prison for $1 billion Apple stock scheme

November 20, 2013 Leave a comment

Trader gets 30 months in prison for $1 billion Apple stock scheme

6:01pm EST

(Reuters) – A former trader was sentenced to 2 1/2 years in prison on Tuesday for an unauthorized purchase of about $1 billion in Apple Inc stock that eventually led to the demise of financial services firm Rochdale Securities. David Miller, 41, was sentenced by U.S. District Judge Robert Chatigny in Hartford, Connecticut, seven months after pleading guilty to wire fraud and conspiracy.Prosecutors said the Miller, of Rockville Center, New York, conspired with another individual to buy 1.625 million Apple shares on October 25, 2012, the same day that the company planned to report third-quarter results, in the hopes that the share price would rise. The co-conspirator was not identified in court papers.

Miller falsely told Rochdale the trade was for a customer who had, in fact, only asked to buy 1,625 shares, prosecutors said. When the gamble failed, Rochdale faced $5.3 million in losses on the additional unauthorized shares, leaving the firm undercapitalized, according to a related civil lawsuit filed against Miller by the U.S. Securities and Exchange Commission.

As a result, the firm eventually collapsed, the SEC said. Rochdale, which was based in Stamford, Connecticut, was not a defendant in either case and did not face allegations of wrongdoing.

Prosecutors also said Miller defrauded another brokerage by convincing it to sell 500,000 shares of Apple to hedge against the purchase he had made at Rochdale. The second brokerage, which prosecutors said was able to trade out of the position at a profit, was not identified in court papers.

Miller’s attorney, Kenneth Murphy, was not immediately available for comment. In April, following Miller’s plea, he said the actions were “out of character for a kind and generous family man who has lived an otherwise law-abiding and good life.”

The cases are U.S. v. Miller, U.S. District Court, District of Connecticut, No. 12-mj-00288; and SEC v. Miller in the same court, No. 13-00522.

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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