Bloomberg News

Rochdale Said to Seek Capital Lifeline After Trading Error

November 02, 2012

Rochdale Said to Seek Capital Lifeline After Trading Error

Richard Bove, vice president pf equity research at Rochdale Securities. Photographer: Jin Lee/Bloomberg

Rochdale Securities LLC, the 37-year- old brokerage that employs bank analyst Dick Bove, is seeking a capital injection after a trading error, said three people with knowledge of the firm’s situation.

Executives at Rochdale are telling employees and potential investors that a trader made an unauthorized purchase of Apple Inc. (AAPL) shares (AAPL:US), which has eroded the capital of closely held Rochdale, said one of the people, who requested anonymity because the overtures have been private.

Rochdale bought more Apple shares than the brokerage’s management intended around the technology company’s Oct. 25 earnings report, two of the people said. Rochdale officials told employees that a rogue trader amassed the position, one of the people said.

Smaller brokerages are becoming more vulnerable as money managers buy and sell fewer securities and execute more transactions electronically. Led by President Daniel J. Crowley, Rochdale had $3.44 million of capital at the end of last year, according to a filing with the U.S. Securities and Exchange Commission.

The firm approached potential investors over the weekend, including rival brokerages, said two of the people.

Research Services

Rochdale has provided trading and research for institutional clients since 1975 and doesn’t do investment banking, according to the Stamford, Connecticut-based company’s website. Its most visible analysts include Bove, who covers the biggest U.S. banks.

In May 2008, months before the peak of the financial crisis, Bove reduced his ratings to sell on Goldman Sachs Group Inc., Merrill Lynch & Co. and Lehman Brothers Holdings Inc., citing concern that earnings would falter. Lehman collapsed four months later, filing the biggest bankruptcy in U.S. history, and Merrill sold itself to Bank of America Corp.

Crowley didn’t return phone calls today seeking comment. Apple, based in Cupertino, California, forecast profit last week that fell short of analysts’ estimates.

To contact the reporters on this story: Hugh Son in New York at hson1@bloomberg.net; Saijel Kishan in New York at skishan@bloomberg.net; Zeke Faux in New York at zfaux@bloomberg.net

To contact the editor responsible for this story: Rick Green at rgreen18@bloomberg.net


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