[ by Melanie Gretchen and Howard Haykin ]

A former Rochdale Securities trader pled guilty to wire fraud and conspiracy after acknowledging that he had conspired with a customer to buy $1 billion worth of Apple Inc. shares in a "get rich quick" scheme. Unfortunately for the trader, customer and most of all, Rochdale Securities "Murphy's Law" took hold and destroyed the firm.

Prime Application of Murphy's Law.   On 10/25/12, the day Apple Inc. would be issuing its Q3 earnings report, trader David Miller, 40, arranged with a customer to bet that the market would respond bullishly to Apple's quarterly numbers.

Miller had the customer call in a 1,625 share buy order for Apple common stock.  Rather than entering the correct quantity, Miller entered the order as 1.625 million shares, which had a market value of about $1 billion.  MIller falsely told Rochdale that the big trade was for a customer, even though the order was for just 1,625 shares.

True to Murphy's Law, the bet backfired and the disappointing earnings report led to a sell off of shares, leaving Rochdale on the hook for $5.3 million of losses on the extra 1,623,375 shares. 

The Stamford, CT-based firm was undercapitalized, could not get funding, and in November the firm ceased operations and its staff left or was fired.  On 2/25/13, Rochdale withdrew all its registrations.

Federal Sanctions.   David Miller entered his plea before U.S. Magistrate Judge Donna Martinez in Hartford, CT.  His sentencing hearing had been scheduled for 7/8/13, at which time he could have been sentenced to a maximum of 25 years in prison.   Instead, under the plea agreement, he likely will receive 5 to 8 years. The Rockville Centre, NY, resident currently is free on bond.  MIller also faces a related civil fraud lawsuit by the SEC.

The cases: 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.

For further details, go to [Reuters, 4/15/13].