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SEC sues ex-Rochdale Securities broker for fraud trading

The US Securities and Exchange Commission (SEC) has sued David Miller, a former employee of Connecticut-based Rochdale Securities broker, for creating a scheme and placing unauthorized orders to purchase Apple stock for personal benefit.

The US watchdog accuses the institutional sales trader for misrepresenting to Rochdale Securities, saying that a customer had authorized the Apple orders and assumed the risk of loss on any resulting trades.

In order to gain personal profit, the accused placed 1.625 million shares of Apple stock worth nearly $1bn, whereas the customer had asked to purchase only 1,625 shares.

The price of the stock decreased after an earnings announcement later, subsequently causing the firm to cease operations to cover the losses suffered from the trade.

SEC enforcement division’s market abuse unit chief Daniel M Hawke said, "Miller’s scheme was deliberate, brazen, and ultimately ill-conceived."

"This is a wake-up call to the brokerage industry that the unchecked conduct of even a single individual in a position of trust can pose grave risks to a firm and potentially to the markets and investors," Hawke added.

In separate SEC administrative proceedings, Miller will be disqualified from working in the securities industry or participating in any offering of penny stock, to settle the SEC’s charges.

Miller has agreed to a partial settlement of the charges and also pleaded guilty in a parallel criminal case.