A trade gone wrong endangers an investment company. In a world of high-speed trades and limited controls, this sadly isn’t news. It seems even large investment firms are just one “rogue” or “fat finger” trade away from destruction. The only odd thing about Rochdale Securities’ recent woes is that its sizable loss had nothing to do with its famous — mostly for being wrong — bank analyst, Dick Bove.
Rochdale Securities confirmed that an “unauthorized” trade in Apple had resulted in the firm’s desperate search for additional capital. According to a Bloomberg article, Rochdale has told people that the massive bet on Apple on or around its recent earnings announcement was at the hands of a “rogue” trader.
These days rogue is used as a euphemism for 1) a poorly trained and even more poorly supervised trader, 2) a company without even the most basic risk management department, or 3) a trader that is lionized every time his bets come in but is thrown under the bus the minute he loses.
Rochdale is best known as home to Dick Bove, the bank analyst who had the foresight to upgrade Lehman Brothers to a “Buy” on August 21, 2008, less than one month before the company filed for bankruptcy.
Sources and Coverage:
Bloomberg by Hugh Son, Saijel Kishan and Zeke Faux Rochdale Said to Seek Capital Lifeline After Trading Error
Zero Hedge by Tyler Durden, Did Apple’s Slide Just Blow Up Dick Bove’s Employer?
CNBC Fast Money Now Bove Upgrades Lehman
The Wall Street Journal by Shira Ovide Dick Bove’s 5 Most Entertaining (and Sometimes Wrong) Predictions