Relying on the Fat Finger Excuse

compliance and fat fingers

David Miller was a big Apple enthusiast. He saw the growing stock price and must have been scheming of ways to make some extra cash by jumping on board Apple’s express train to riches. He saw the golden ticket when a client asked him to make a series of Apple stock purchases. Instead of following the client’s instructions to buy 1,625 shares, he could add a few zeroes and buy 1,625 thousand shares.

While Apple stock continued its stratospheric rise in price, Miller would share the profits from the “mistake” with his client. But the balloon popped and the train crashed. Apple had less than stellar quarterly numbers. The stock price decreased. Miler and his firm were sitting on a $5.3 million loss.

Needless to say the client was not happy about the unauthorized trade on his behalf, leaving the firm to take a sour bite and eat the loss. Apparently Miller’s excuse was supposed to be a “fat finger” excuse. Miller accidentally added a few zeroes. Maybe that was a good excuse. The message from client could be misread:

“AAPL . . . b 125 ok (per ½ hr)”

That excuse could have worked except Miller also placed another unauthorized trade to sell 500,000 shares of Apple stock. That makes it really difficult for Miller to claim the fat finger excuse. One mistake might get a pass, but the second shows bad intent. That bad intent got him a fine from the SEC and a criminal charge from the DOJ.