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Dick Bove’s firm is still hustling for a lifeline.
Sixteen days after a rogue trader rocked Stamford, Conn.-based Rochdale Securities, the broker-dealer, still hasn’t reached a deal with a deep-pocketed investor, sources said.
“If not this week then the next,” said one person familiar, noting that the firm was not under pressure to find a so-called white knight to buy it or inject capital into the firm.
While the search for a savior continues, employees at the hobbled firm can only sit and wait.
Regulatory rules bar Rochdale’s traders from trading stock — which means they are relegated to nursing client relationships and offering stock guidance until the firm resolves the lingering capital shortfall.
Rochdale’s shortfall may be anywhere from $5 million to $11 million.
The firm, which does not trade using its own money but acts as an agent trading stock on behalf of its roster of clients, maintains net capital of about $3.5 million.
The 37-year-old brokerage was rocked on Oct. 25 when a trader, identified by sources as David Miller, made an unauthorized purchase of $1 billion worth of Apple stock — 10 times more than his client requested.
Miller, according to people familiar with his thinking, claims it was a mistake.
Rochdale, sources said, believes the 40-year-old trader was part of a stock-manipulation scheme that may have netted him $20 million in profits.
Many of the staff of the roughly 55-person broker-dealer are said to be committed to staying until the company’s boss, Dan Crowley, can forge a deal to save the firm from extinction.
Bove, an outspoken bank analyst, has assured Rochdale’s brass that he won’t split amid the broker-dealer’s efforts to strike a deal.
That said, the ill-fated Apple trade comes as Wall Street bonus season is about to get under way, and the capital shortfall won’t make it easy to pay hefty bonuses.
Meanwhile, all was quiet at Miller’s quaint two-story Long Island home.
Miller has not been charged with any crime or securities violation — but last month hired Kenneth “Casey” Murphy, with Smith & Partners, who is known for his white-collar criminal defense work.
There was no answer when a visitor knocked on Miller’s front door yesterday. Two SUVs were parked in the driveway.
A yellow Labrador Retriever could be seen barking in the basement.
Miller has not returned back to work since placing the Apple trade on Oct. 25.
Rochdale’s allegations about Miller’s trade are being probed by the Securities and Exchange Commission, the Financial Regulatory Authority and the FBI.
Miller, a trader with 20 years on the Street, has maintained that he made a mistake — inputting a $1 billion, 1.6 million-share order instead of a 160,000-share order.
However, Miller’s actions are viewed as suspect because the purchase was made in multiple increments throughout the day and it is unlikely to have been the result of a simple “slip of the finger,” people familiar with the matter argue.
Miller’s client, sources said, does not typically purchase public stock but was sufficiently well-capitalized that a big-ticket order wouldn’t have raised eyebrows.