Former Rochdale Securities trader David Miller was jailed for two-and-a-half years after fraudulently buying a billion dollar’s worth of AAPL shares in the hope of cashing-in on an expected rise in the stock price after last year’s Q4 earnings call, reports Fortune.
Earnings were due out Oct. 25, and Miller expected what analysts call a positive surprise.
He took a client’s order for 1,625 shares of Apple, moved the decimal point three places, and bought 1.6 million shares — a billion dollars worth — using his employer’s capital for collateral …
His plan was to wait for the stock price to climb, sell the shares, pay the client the profit on their investment and pocket the rest himself. Even a modest rise on a billion dollar investment would have netted him tens of millions of dollars.
Unfortunately for Miller, Apple missed its earnings projection and the stock price fell rather than rose. He lost the bet – and $30M in cash neither he nor his employer had, leading Rochdale Securities to go out of business.
Miller can, however, count himself lucky. Despite the sum of money involved, he persuaded the court that he had acted out of debt-induced desperation rather than greed, and got sentenced to 30 months rather than the maximum 30 years.
Given that the bet, historically, was a good one, it is tempting to wonder whether the fraud would ever have been uncovered if he’d won rather than lost …