Rochdale Remains on Rocky Road to Recovery
Traders Magazine Online News, December 7, 2012
Rochdale Securities may have closed down, because of a bad billion-dollar bet on Apple. But it's still on the comeback trail, while the trader who made the bet got arrested.
The Stamford, CT, institutional trading firm still hopes to re-open its doors, shortly.
Its chief executive, Dan Crowley, Thursday told FOX Business the firm could strike a deal by early next week and then reopen for business.
That came two days after the United States Attorney for the District of Connecticut and the New Haven Division of the Federal Bureau of Investigation announced that former Rochdale trader David Miller of Rockville Centre, N.Y., was arrested for wire fraud.
“As alleged, this defendant orchestrated the unauthorized purchase of approximately $1 billion of Apple stock in a fraudulent get-rich-quick scheme that backfired, causing massive losses for his employer,” according to U.S. attorney David Fein.
Miller's alleged fraud occurred on October 25 when Apple was scheduled to announce its quarterly earnings.
He bet the price of the stock would bounce up, after the announcement and bought 1,625,000 shares in anticipation.
The price dropped, however, and it turned out, according to the complaint, that a Rochdale customer had only ordered 1,625 shares.
Rochdale was left holding more than 1.6 million shares of Apple stock and suffered losses of approximately $5 million, trading out of the position.
Miller was released on a $300,000 bond. He could be imprisoned, if found guilty, for as much as 20 years.
With all this going on, Rochdale's star bank analyst, Dick Bove, told Bloomberg News that he will decide whether to stay with the firm by December 15.
He has been interviewing for jobs elsewhere and narrowed his choices to three firms.
But the 71-year-old analyst told his potential new employers he’s going to stick with Rochdale if he can.
“I indicated to them that my loyalty is with Dan Crowley and so I couldn’t make a decision until Dan threw in the towel,” Bove told Bloomberg. “The decision I make is really based on whether I want to stay with a small firm and write what I’m going to call provocative research or whether I want to go back in the general Wall Street milieu, dealing with corporate finance issues.”
Rochdale lost five traders to Rafferty Capital Markets last month, including Kristen Talgo and Hal Tunick, who led institutional equities trading. In addition, Richard Bennett and Keith Arnott, who work as equity sales traders, left for MKM Partners LLC. Barry Kaplan joined Oscar Gruss & Son Inc. in New York.
For more information on related topics, visit the following channels: