The US Securities and Exchange Commission (SEC) has charged David Miller, a former employee at Rochdale Securities, for scheming to personally benefit from placing unauthorised orders to buy Apple stock worth about $1bn.
The watchdog said when the scheme backfired, it caused the firm to cease trading.
Miller has agreed to a partial settlement of the SEC’s charges and also pleaded guilty in a parallel criminal case.
The SEC alleges that Miller misrepresented to Rochdale Securities that a customer had authorised the Apple orders and assumed the risk of loss on any resulting trades.
According to the SEC, the customer order was to purchase just 1,625 shares of Apple stock, but Miller instead entered a series of orders totalling 1.6 million shares at a cost of about $1bn.
The SEC said Miller bought 1.6 million Apple shares on 25 October 2012, the day Apple announced its earnings.
After releasing earnings, Apple’s stock price began dropping so the trade was not profitable.
The regulator said that Miller denied buying all but 1,625 Apple shares, and Rochdale was initially forced to take responsibility for the unauthorised purchase which was sold at a loss of about $5.3m.
SEC enforcement division’s market abuse unit chief Daniel Hawke said: "Miller’s scheme was deliberate, brazen, and ultimately ill-conceived."
"This is a wake-up call to the brokerage industry that the unchecked conduct of even a single individual in a position of trust can pose grave risks to a firm and potentially to the markets and investors," Hawke said.
