There are a lot of good options and I’m not prepared to make a definitive choice at this time, but I can at least say that one of my favorite recent financial crooks is David Miller, the doofus who put a fat suit on his finger, bought 1.6 million instead of 1.6 thousand Apple shares, and brought down Rochdale Securities. His story is nearing its sad conclusion:
David Miller, an institutional sales trader who lives in Rockville Centre, N.Y., has agreed to a partial settlement of the SEC’s charges. He also pleaded guilty today in a parallel criminal case.
The SEC alleges that Miller misrepresented to Rochdale Securities LLC that a customer had authorized the Apple orders and assumed the risk of loss on any resulting trades. The customer order was to purchase just 1,625 shares of Apple stock, but Miller instead entered a series of orders totaling 1.625 million shares at a cost of almost $1 billion. Miller planned to share in the customer’s profit if Apple’s stock profited, and if the stock decreased he would claim that he erred on the size of the order. The stock wound up decreasing after an earnings announcement later that day, and Rochdale was forced to cease operations in the wake of covering the losses suffered from the rogue trades.
The phrase “planned to share in the customer’s profit” is a little vague, and when we first talked about Miller I assumed that he was hoping to claim a fat finger either way and just keep the profits for Rochdale. Nope – Miller’s customer was in on the plan. From the criminal complaint: Read more »
After one investor conference in June 2011, veteran bank analyst Richard Bove says he called the lender’s investor relations department to complain. “I told them I didn’t believe such an incredibly bad presentation could be made,” Bove says of Moynihan. “He doesn’t have the ability to speak off the cuff, and to let him is to destroy shareholder wealth.” Moynihan’s lack of eloquence is the main reason he’s underestimated, says Bill Miller, chairman of Legg Mason Capital Management Inc., whose funds own about 4 million Bank of America shares. Miller says the stock can double within three years. “There’s a tendency to impute much greater skill on the part of somebody like Jamie Dimon, who is very smooth, over someone like Brian,” Miller says. “People say, ‘Oh, he doesn’t speak well, and he stumbles over his words and he’s sweating.’” [Bloomberg]
When regular old bank analysts switch firms, people don’t tend to make a big deal about it. Gardening leave is taken, contracts are signed, key cards are distributed, new business cards are printed. Sometimes you’ll get an email address with updated contact information. That’s usually it. Dick Bové, as you all know, however, is no regular bank analyst. Which is following his departure from Rochdale Securities, potential employers didn’t interview him, he interviewed them, why his son/spokesman, Joe Bové sent out a press release announcing the final countdown to Bové Day, and why, when that blessed day arrived, it was celebrated with a three-course feast fit for a king and a little something called the Dick Bové Banking Manifesto. Read more »
Last month, “noted bank analyst” Dick Bové informed the people that after careful consideration, he had finally selected the lucky winner of the Dick Bové Sweepstakes, tapping Rafferty Capital Markets LLC to be his new employer over a large pool of suitors banging down his door. Today, Bové’s colleague/unofficial spokesman/son none of us knew about until now sent a letter to clients re: the new gig (and some background about the selection process) containing good news and bad news.
The bad news: As previously noted, Dick Bové apparently has a son who he works with, i.e. we could have lived in a world where there was a firm called Bové & Sons, if only they’d struck out on their own!
The good news: The duo will start cranking out the good stuff on January 28, if all goes according to plan. Read more »
Noted bank analyst Dick Bove is joining New York-based brokerage firm Rafferty Capital Markets LLC. Bove said Wednesday he will begin publishing research again in about a month…Bove said he moved to Rafferty because the firm doesn’t have an asset management or investment banking branch. “I really wanted to do pure research and nothing else. Rafferty gives me that opportunity,” he said. [WSJ, earlier, earlier]
Noted bank analyst Dick Bove is planning to submit his resignation from Rochdale Securities LLC on Monday, according to a person familiar with his plans. Mr. Bove has remained at Stamford, Conn.-based Rochdale as it has searched for a rescue since Oct. 25, when a trade in shares of Apple left it in what President Daniel Crowley called a “negative capital position.” [...] Mr. Bove has been unable to publish stock research since the errant trade, because Rochdale’s cash shortfall has prevented the firm from trading securities or issuing analysis. [WSJ, earlier]
Dick Bove, the bank analyst whose brokerage, Rochdale Securities LLC, is struggling to survive after an unauthorized $1 billion Apple Inc. trade, said he’s been interviewing for a new job. Bove said he has narrowed his choice to three firms, which he declined to name, and will make a decision by about Dec. 15. The 71-year-old analyst said he’s giving Daniel Crowley, Rochdale’s chief executive officer, time to seek rescue financing after a loss on the Apple trade decimated the firm’s capital. “I indicated to them that my loyalty is with Dan Crowley and so I couldn’t make a decision until Dan threw in the towel,” Bove said today in a telephone interview. “The decision I make is really based on whether I want to stay with a small firm and write what I’m going to call provocative research or whether I want to go back in the general Wall Street milieu, dealing with corporate finance issues.” [Bloomberg]
A thing we sometimes like to do around here is use stories ripped from the headlines to illustrate to you, in case hypothetically this should ever be of any practical interest, how – and how not – to safely and effectively engage in financial fraud. This Rochdale guy was just arrested by the FBI, so I guess he’s a “how not” story, though I’m a little torn because I like part of his style. From the complaint:
[A] representative of Customer #1, who will be referred to as “Customer Rep. #1,” sent an instant message to [now-former Rochdale trader David] MILLER to buy Apple stock every half hour. Specifically, the message read “b 125 ok (per 1/2 hr).” MILLER confirmed that he would do so.
Records reflect that shortly after receiving this order, MILLER began trading in Apple. Over the course of the day, MILLER entered multiple, separate orders in Rochdale’s order management system in the amount of 125,000 shares. Each such order was executed over a period of time through various trading platforms to which Rochdale had access, including, but not limited to, a system that gave Rochdale direct electronic access to the New York Stock Exchange. Once MILLER fully executed one order for 125,000 shares, he would close out the order and promptly enter a new order into Rochdale’s order management system.
He ended up with a total of 1,625,000 shares, or 1,623,375 more than the customer ordered. Then of course the stock went down and so, more or less, did Rochdale. Reuters notes that “At the time, Miller told his superiors the purchases had been a fat finger error,” though you’ll note that the actual pattern of trading requires fifteen separate fat finger errors. Less “fat finger” and more “fat brain,” or “fat misreading of a client IM.” Still it has the whiff of almost plausibility about it; who among us has not misplaced three zeroes at some point in our financial lives?1
But then there’s this: Read more »
Rochdale Securities LLC, the 37-year- old brokerage that employs bank analyst Dick Bove, is seeking a capital injection after a trading error, said three people with knowledge of the firm’s situation. Executives at Rochdale are telling employees and potential investors that a trader at the firm made an unauthorized purchase of Apple shares, which has eroded the capital of closely held Rochdale, said one of the people, who declined to be identified because the overtures have been private. [Bloomberg]
In the face of “constant hostility”—including lawsuits and a general lack of interest in promoting the industry—banks ought to leave New York and head for friendlier terrain, analyst Dick Bove said. In a note released a day after New York Attorney General Eric Schneiderman announced a lawsuit against JPMorgan Chase, Bove said it’s time for banks to head to states where they won’t face such an unwelcoming environment…Bove does not address the merits of New York’s case against JPMorgan, the largest bank by desposits in the U.S. But he said the general tenor towards banks in the state make it no longer feasible to operate there. “I am constantly struck by the fact that Michigan does not sue the auto industry; Texas is not suing the oil industry; California is not suing the entertainment industry; and Florida is not suing the tourism industry,” Bove wrote. “They do not sue farmers in Iowa. New York never stops suing the financial industry. Why? What do these other states understand that New York does not?” [CNBC]
Picture this. You’re world-renown bank analyst Dick Bové, famous for, among other things, issuing a report in summer 2008 about which banks were “next” to fail, not rolling over and taking it when Citigroup tried to screw you good, and standing by Ken Lewis when literally no one else (including his board) would. When you walk into rooms, people notice. More often than not, they ask you to pose for pictures, kiss their babies, sign their tits. Some have fainted in your presence. You’re the fifth Beatle, Justin Bieber, and George Clooney, all wrapped into one devastating little package. It should go without saying that an appearance by you at your local branch bank, to cash six-figure checks, as you often do, would be call for a red carpet and the crème de la crème of customer service, right? Apparently wrong. Read more »