Errant Apple Trade Wipes Out Dick Bove and Rochdale's Safety NetVW Staff
Thanks to recent errant trading in Apple shares, Rochdale Securities LLC sought help to keep the firm solvent this past weekend.
In a statement by Rochdale President Daniel Crowley on Saturday, he said via the Wall Street Journal, “Rochdale had an unauthorized trade that left us with a negative capital position. We are in talks that would result in a healthy balance sheet, and we expect to be trading maybe as early as Monday.”
Crowley added that it was unauthorized trading in Apple shares which caused the problem, but he didn’t provide additional details of the transaction. As of Saturday evening, the company was holding talks with two firms for a potential capital injection.
This included a rival firm, BNY ConvergEx Group LLC, reported Bloomberg but this hasn’t been confirmed.
So what happened at the firm?
According to Bloomberg, Rochdale executives have told possible investors that a trader working at the firm’s Stamford, Conn. headquarters, purchased between $750 million to $1 billion of Apple Inc. (NASDAQ:AAPL) shares in October. He did not receive permission to execute the trade, and according to sources, it came around the time of the technology company’s quarterly earnings report on Oct. 25.
The stock’s value subsequently fell by a few million dollars and from the trade’s decline, it wiped out Rochdale’s safety net against losses.
A regulatory filing at the end of 2011 showed that the firm had $3.44 million in capital.
According to Rochdale’s website, it has been providing trading and research for institutional clients since 1975. Prominent bank analyst Dick Bove is employed by the firm. It has 26 registered representatives housed in corporate headquarters and six additional ones in New York, reported Bloomberg.
On Friday, an Apple Inc. (NASDAQ:AAPL) spokeswoman said the company doesn’t make comments on the trading in the company’s stock.
As for Apple Inc. (NASDAQ:AAPL)’s decline, year-to-date, it is up 42.8%, but in the last four weeks, it has declined 11.38%. Since its September record close, its shares are off 18%.