Feds Say Trader Used Client Account for Fraudulent Stock Deal

Securities fraud often involves a financial professional exploiting a client for personal gain.

Law enforcement agents claim this is what happened last October at Rochdale Securities, a Stamford, Conn.-based financial services firm. One of its former traders, David Miller, bought more than 1.6 million shares of Apple stock (worth $1 billion) for a client who later claimed he’d only wanted 1,625 shares, according to an article on the LI Herald.com Web site.

Miller’s purchase coincided with Apple’s Oct. 25 fourth quarter earnings announcement. Initially, Miller told Rochdale Securities that the customer (and not Rochdale) risked loss if the transaction went south. Had his purported scheme gone according to plan, Miller might have made millions illegally, say authorities.

But turning a profit on the purchase required Apple’s stock to rise on positive earnings news. Instead, because of less-than-expected iPad sales, Apple stock dipped—leaving Rochdale Securities out $5 million. Then Miller’s client explained to Rochdale he’d only wanted 1,625 shares of Apple—so Miller then claimed he’d over-bought the stock by accident.

Soon after, the FBI, along with the U.S. Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA), began to look into the matter. In December, authorities arrested Miller on federal wire fraud charges—and not only was he fired, if convicted, he faces a possible 20-year jail sentence.

“As is so often seen in these types of cases, the alleged criminal conduct of Miller was for personal gain at the expense and detriment of others,” said the FBI special agent heading the investigation.

If you or a loved one has been taken advantage of by a securities fraud scam, call Sokolove Law today for a free legal consultation about a securities fraud lawsuit.

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