SEC Settles With Apple Stock Day Trader
Apple stock is well known and popular among investors. It is also attractive to fraudsters who focus on the high tech giant’s shares for schemes. One scheme, for example, brought down New York brokerage Rochdale Securities when a registered representative had a fool proof scheme: buy $1 billion in shares on one day and, if the price went up by the end of the day take the profits, or if not disavow the trades. The scheme ended with the firm out of business and the trader charged by the U.S. Attorney and the SEC. U.S. v. Miller, 3:12-mj-0028 (D. Mass April 15, 2013); SEC v. Miller, Civil Action No. 3:13-cv-00522 (D. Mass. Filed April 15, 2013).
The SEC settled another case centered on Apple stock at the end of last week. SEC v. Bliss, Civil Action No. 2:15-cv-00098 (D. Utah Filed Feb. 11, 2015). In this action Roger Bliss operated a multimillion investment fraud scheme over a seven year period beginning in 2008. Unlike many investment schemes which claim to be based on proprietary trading techniques or which supposedly invest in exotic instruments, Mr. Bliss only invested in one stock – Apple. Mr. Bliss claimed that he day-traded exclusively in Apple stock. He never had a losing day, according to his sales pitch. He also told potential investors that he had more than $300 million in assets under management. About $260 million was supposedly his capital. Returns of course were guaranteed – and those returns would be at least 100% and up to as much as 300%.
Investors flocked in. In fact Mr. Bliss had lots of losing days. His brokerage records for the period January 2012 through the end of 2015 showed that he had losses of over $3.2 million. The scheme ended with Mr. Bliss pleading guilt to state securities fraud charges. He was ordered to pay over $20 million in restitution. He also pleaded guilty to charges of perjury and obstruction of justice for lying to the court in connection with a freeze order secured by the SEC in its case against him.
Last week the court entered a final judgment against Mr. Bliss. In that judgment the court entered a permanent injunction against Mr. Bliss, prohibiting future violations of the registration and antifraud provisions of the federal securities laws. The order also directs that he pay almost $11 million in disgorgement which will be deemed satisfied at the conclusion of a court-appointed receivership. See Lit. Rel. No. 23524 (April 22, 2016).