A New York state-court judge awarded now-defunct Rochdale Securities nearly $8 million in damages from Pershing, on charges the clearing broker executed an unauthorized trade in Apple stock in October 2012 that ultimately led to the demise of Stamford, CT-based Rochdale Securities. 

According to FBI records, the downfall of Rochdale Securities began with a stock-purchasing scheme executed by rogue trader, David Miller, and a customer at the time that Apple released its quarterly earnings on 10/25/12.  Under the scheme, …

• Miller agreed to submit an order for Apple stock and write it in a way that Mr. Miller could later claim he misinterpreted it. 
• Miller then made a trade for 1,000 times the number of shares. 
• If Apple shares rose after the release and the trade provided profitable, Miller and the customer would share the profits. 
• If the trade lost money, Miller “would claim human error, leaving Rochdale holding the losing position.”
• Rochdale, who realized Miller’s giant purchase, began selling off the Apple stock the next morning. They made a small profit, but the price dropped by about $9 per share several hours later.
• Despite the dip, Pershing officials pressured Rochdale to sell the rest of the stock immediately.
• The sudden sale left Rochdale with a big loss: $5,314,967.
• Rochdale stopped trading the day after the fraudulent Apple stock purchase and later filed for bankruptcy. It had been in business for over 35 and had employed 60 brokers and analysts at the time.

In 2013, Mr. Miller was sentenced to 30 months in prison for his role in the scheme.

Rochdale's Arguments.  (i) Pershing had the power to reverse the massive trade, knowing it was a mistake and that Rochdale didn’t have the money to pay for the purchase;  (ii) Had Pershing permitted Rochdale more time to sell the rest of the stock, the firm would have avoided the huge loss.

Pershing had denied wrongdoing and asserted in court papers that it didn’t have the power to undo Rochdale's trade.