The probe looking into a bizarre $1 billion Apple (NASDAQ:AAPL) stock scandal that ran a Connecticut trading firm into the ground has turned up the customer involved in the deal, the Financial Times is reporting. Harlan Sender, a trader at New York-based hedge fund Quad Capital, has been suspended in light of his role that he played in the scheme.
David Miller, of the now-former Rochedale Securities, pleaded guilty last month to conspiracy and wire fraud, after passing an unauthorized sale of $1 billion worth of Apple shares. According to court papers, Miller placed an order for 1.6 million shares of the company, when the customer — who was unnamed in the court filings — had placed an order for a mere 1,625. If Apple’s stock went up in price, the two would share the benefits, but if it went down (which it did, dramatically) Miller would chalk it up to human error. Unfortunately, the “error” left Rochedale footing the bill for the order, and subsequently put the firm out of business.
“This defendant participated in a fraudulent scheme in which he would either reap huge profits through the unauthorized purchase of approximately $1 billion of Apple stock or, if he faced huge losses, explain it away as simple human error,” U.S. Attorney David B. Fein in Connecticut said at the time.
With losses of $5.3 million, Rochedale fell below regulatory limits and was forced to cease its operations. It withdrew its licensing and related properties earlier this year.
Sender was fully cooperative with the probe, and Quad Capital has asked him to return. “Mr. Sender answered every question put to him by the government and our understanding is there are no more questions that will be asked of Mr. Sender,” Sender’s attorney said. He is not being charged in the case, and attorneys for both Sender and Quad maintain that he did nothing wrong.
Miller, meanwhile, is scheduled to be sentenced on July 8. He could face as long as 25 years in prison for his role. Reportedly, Miller was struggling with his personal finances — missing mortgage payments, and so on. Rochedale had been wary of him previously, due to other instances of unauthorized activity, but the firm had given him a second chance as he was supporting a young family, the Financial Times said.
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