
Trader admits fraud in $1 billion Apple stock scheme - Anil-Shrestha
http://finance.yahoo.com/news/trader-admits-fraud-1-billion-195510715.html
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gwern
> When the bet backfired, Rochdale was on the hook for $5.3 million of losses
> on the extra 1,623,375 shares, leaving the Stamford, Connecticut-based
> company undercapitalized, the SEC said in court papers.

That actually sounds like an incredibly small loss, overall.

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monatron
This is the main thing I got out of this story when it first broke.

The firm was able to buy over a billion dollars worth of stock but was
undercapitalized after incuring a loss ~5MM? Just doesn't make sense.

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ChuckMcM
Its the difference between the purchase price and the settlement date. I've
got no idea what really happened but can speculate that what happened was that
an order to purchases 1.625M shares goes in, (that will cost $1B), the trades
are recorded people who've sold get notified they sold @ $xx etc. Now the
trader was hoping the price goes up by a few $, then sells again. Now if
everything "works as planned" when the trades are settled at the end of the
day the people who bought put their money in the people who sold get their
money out and the left over is in the bank.

But if you buy the shares in the morning and the price goes down, if you want
to 'hold' and wait, you need $1B to cover the purchase of the stock, but if
you want to 'cut your losses' you just sell the stock again for what ever you
can get before the markets close.

I'm guessing this was what happened, and at the end of the day the difference
was $5.3M which the company had to come up with to balance their accounts.
That left them with not enough money for day to day operations, poof they are
dead.

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Wonderdonkey
This man really did not pay attention. I've rarely seen Apple stock rise the
day of a press or investor briefing no matter how good the news. In fact it
has often been the opposite. In fact, now that I've looked over just the last
year, most of the times Apple issues a press release its shares close the same
day or the next below the level they were at the day before the announcement.

Out of 40 times Apple put out a press release in the last year, more than
three-fourths of those times the stock declined that day or the day following
(31 times). And only once did a positive trading day coincide with a new
product announcement. The exceptions were:

    
    
       Dec. 17, 2012 (iPhone 5 First Weekend Sales in China Top Two Million)
       Nov. 19, 2012 (AC/DC Now on iTunes)
       Nov. 5, 2012 (Apple Sells Three Million iPads in Three Days)
       Sept. 17, 2012 (iPhone 5 Pre-Orders Top Two Million in First 24 Hours)
       Sept. 12, 2012 (Apple Introduces iPhone 5, Apple Introduces New iPod touch & iPod nano, Apple Unveils New iTunes)
       Aug. 27, 2012 (Craig Federighi, Apple’s Vice President of Mac Software Engineering & Dan Riccio, Apple’s Vice President of Hardware Engineering Join Apple’s Executive Team as Senior Vice Presidents)
       July 30, 2012 (Mountain Lion Downloads Top Three Million)
       June 26, 2012 (Apple Launches iTunes Store in Hong Kong, Singapore, Taiwan & Nine Additional Countries in Asia Today)
       April 25, 2012 (Apple Worldwide Developers Conference to Kick Off June 11 at Moscone West in San Francisco)
       

I'm pretty sure this has been the trend throughout Apple's history. The worst
stock days seem to come when Apple has great news to report. At any rate, Wall
Street surely does not care about Apple's new product announcements, at least
not when it comes to shelling out for stock. Product sales or downloads,
sometimes. New products, very rarely.

It's something I noticed in the early 2000s when I was a Mac reporter and very
in tune with Apple's PR/IR efforts, but it's not something I actually
consciously tracked, and I've already wasted enough time on something that
doesn't affect me except as a curiosity.

Anyway, it never made sense to me the way good news from Apple translated into
declining stock prices. But there you go. A little casual observation could
have saved this man a lot of hassle.

~~~
mikecsh
"Buy on the rumour, sell on the news"

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malkia
Where are the "unit" tests, the asserts, the catch/throw exceptions for
brokers? What we have here is not just crash dump, but blue screen without
option to reboot....

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kapitalx
Now everytime I see cases like this I wonder to myself how much of the plea is
because of over-reaching prosecutors and how much of it is really guilt.
Anyone know more details about this case?

~~~
SoftwareMaven
Using unauthorized millions of dollars of your company's and, ultimately,
putting a bullet in the company's head, leading to many people losing their
jobs, seems to land in the middle, IMO. Twenty-five years is probably too
many, but a plea of five seems generous,

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Tichy
So buying stock is a "scheme"?

~~~
coldtea
As much as replying without reading TFA is a "comment".

~~~
Tichy
I read tfa. He bought some stock (unauthorized) and lost money with that. What
did I miss?

------
seivan
Nothing but addicts and gamblers.

