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

Reuters

By Joseph Ax

Nov 19 (Reuters) - A former trader was sentenced to 2 1/2years in prison on Tuesday for an unauthorized purchase of about$1 billion in Apple Inc stock that eventually led tothe demise of financial services firm Rochdale Securities.

David Miller, 41, was sentenced by U.S. District JudgeRobert Chatigny in Hartford, Connecticut, seven months afterpleading guilty to wire fraud and conspiracy.

Prosecutors said Miller, of Rockville Centre, New York,conspired with another individual to buy 1.625 million Appleshares on Oct. 25, 2012, the same day that the company plannedto report third-quarter results, in the hopes that the shareprice would rise.

The alleged co-conspirator was not named in court papers.

Miller falsely told Rochdale the trade was for a customerwho had, in fact, only asked to buy 1,625 shares, prosecutorssaid.

When the gamble failed, Rochdale faced $5.3 million inlosses on the additional unauthorized shares, leaving the firmundercapitalized, according to a related civil lawsuit filedagainst 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 adefendant in either case and did not face allegations ofwrongdoing.

Prosecutors also said Miller defrauded another brokerage byconvincing it to sell 500,000 shares of Apple to hedge againstthe purchase he had made at Rochdale.

The second brokerage, which prosecutors said was able totrade out of the position at a profit, was not identified incourt papers.

Miller deeply regrets the harm his actions caused, said his defense attorney Kenneth Murphy.

"As we said on the day of his plea, this was a good anddecent man who had led an otherwise exemplary life who acted outof desperation rather than greed," he said. "Judge Chatigny sawthis to be the case and gave David a fair and reasonablesentence considering all these factors."

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

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