A small Connecticut brokerage firm is fighting for survival after one of its former traders made unauthorized trades in shares of Apple.
Rochdale Securities, which is known for employing the banking analyst Dick Bove, is in negotiations to sell itself or receive a cash infusion from outside investors, according to a person with direct knowledge of the talks.
Late last month, a trader at Rochdale purchased about $1 billion of Apple stock without permission, said this person, who requested anonymity because he was not authorized to discuss the matter publicly. After he bought the shares, Apple - a notoriously volatile stock - dropped in value, costing Rochdale several million dollars. The trader is said to have intended to buy 165,000 Apple shares but the order got executed at 1.65 million shares.
The losses crippled Rochdale, a small firm with only about $3.5 million in capital. The firm doesn't tend to make trades with its own capital, which made the App le trade even more out of the ordinary. Last weekend, Daniel Crowley, the president of Rochdale, told media outlets that the rogue trade had left his firm in a “negative capital position.â€
The Rochdale employee who made the Apple trades is David Miller, according to this person. After placing the controversial trade, Mr. Miller shut down his computer and left the trading floor. He has not returned to the firm, said this person. Mr. Miller could not be reached for comment.
At Rochdale (pronounced “Rockdaleâ€), Mr. Miller worked out of the firm's Stamford headquarters. The firm, which was started in 1975, employs roughly 60 traders and research analysts. Mr. Bove, a well-known bank analyst, is based in Florida.
Rochdale executives have been cooperating with various securities regulators, including the Financial Industry Regulatory Authority and the Securities and Exchange Commission.
Mr. Miller, a journeyman Wall Street trader, has worked at Roch dale since 2009, according to securities filings. Previously, he did stints at a number of small New York broker-dealers, including Ladenberg Thalman; Punk, Ziegel & Company; and M.H. Meyerson.
On Tuesday, an executive at Rochdale only identifying himself as “Pete,†declined to comment.
Rochdale's issue is the latest in a series of trading blunders that have rattled Wall Street. In August, an errant trading algorithm nearly brought down Knight Capital Group. There have been other prominent cases in recent years involving problematic trades, from the botched Facebook initial public offering early this year to a case involving a rogue trader at UBS who is said to have lost the firm $2.3 billion.
