As many stockbrokers in Miami and around the country know all too well, the profession involves big potential risks. Government agencies keep a close eye on the industry and a small mistake can turn into serious criminal allegations.
One former trader is in exactly that situation after he allegedly ordered 1.6 million shares of Apple stock – much more than the 1,625 shares that his client apparently requested. A federal prosecutor charged him with wire fraud last week, alleging that the trader intentionally exceeded his authorization to try to earn higher returns. This purchase apparently cost the brokerage firm a $5 million loss on the shares.
To prove that wire fraud occurred, the prosecutors will have to point to something that indicates criminal intent on the part of the trader. In other words, they will have to prove that the order for 1.6 million shares was not simply a mistake. It is not yet clear how they plan to make this showing but, given the high-profile nature of this case, it seems likely that some evidence exists beyond the client’s version of the story.
The maximum penalty for wire fraud is 20 years in prison. Based on the $1 billion sum involved in this case, it is likely that prosecutors will push for an aggressive punishment – further illustrating the importance of seeking an effective and experienced securities fraud defense lawyer.
Source: Bloomberg News, “Ex-Rochdale Trader Arrested in Apple Stock Case,” Christie Smythe, Dec. 4, 2012
