SEC Charges David Miller in Unauthorized Trading Scheme

SEC v. David Miller, Case No. 3:13-cv-00522 (D. Conn.).  On April 15, 2013, the SEC announced it filed a partially settled enforcement action against David Miller, a former trader with Rochdale Securities LLC.  The SEC alleges that Miller received an order to purchase 1,625 shares of Apple stock.  However, Miller made orders to purchase a total of 1,625,000 shares of Apple (at a cost of almost $1 billion).  According to the SEC, Miller was going to share in the customer’s profit from selling the 1,625,000 shares if Apple’s stock price increased following Apple’s expected earnings announcement later that day.  Miller misled Rochdale’s principals by claiming that a customer had authorized the Apple orders.  When Apple’s stock price decreased, the customer denied buying all but 1,625 Apple shares.  Rochdale took responsibility for the order and sold the Apple stock for a loss of $5.3 million.  This caused the value of Rochdale’s available liquid assets to fall below limits required by SEC and Rochdale had to effectively cease operations.  The SEC charged Miller with violations of Section 17(a)(1) and (3) of the Securities Act, Section
10(b) of the Exchange Act Rule 10b-5 thereunder.  Without admitting or denying the SEC’s
allegations, Miller has settled the SEC’s charges by agreeing to be barred from any future association with any broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization, and to be barred from participating in any offering of penny stock.  Miller also has agreed to an injunction against future violations of the antifraud provisions of the federal securities laws.  The amount of any civil monetary penalty will be determined at a later date by the court upon the SEC’s motion.  In a parallel criminal proceeding, Miller pleaded guilty to one count of conspiracy to commit securities and wire fraud and one count of wire fraud.

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