John Afriyie, Securities Fraud, New York 2016

John Afriyie, a former analyst at a Manhattan-based private investment fund, was arrested this morning and charged with securities fraud for allegedly making approximately $1.5 million in profits through insider trading. Afriyie allegedly traded on material nonpublic information he had obtained about a pending acquisition of ADT Corporation that had not yet been made public.

Afriyie, 28, was presented today in Manhattan federal court before United States Magistrate Judge James L. Cott. According to the complaint, Afriyie accessed material nonpublic information about Apollo’s pending acquisition of ADT in an electronic shared drive folder on the fund’s network server in January 2016.

In approximately 28 separate transactions between January 28, 2016, and February 12, 2016, Afriyie purchased approximately 2,279 ADT call options for a total of $24,254.02 before the public announcement of the transaction. Afriyie purchased the ADT call options through a brokerage account in the name of his mother, which he controlled.

Afriyie did not reveal his affiliation with the fund in the account opening documents for the brokerage account or in his communications with the brokerage firm. Nor did he reveal his trades or the existence of the brokerage account to the fund. The public announcement of Apollo’s acquisition of ADT in February 2016 caused ADT shares to increase in value from $29.20 per share on the day Afriyie began purchasing ADT options to $39.64 per share, resulting in a corresponding increase in the value of the call options Afriyie had purchased.

Afriyie is charged with one count of securities fraud, which carries a maximum sentence of 20 years in prison and a maximum fine of $5 million, or twice the gross gain or loss from the offense. The statutory maximum sentence is prescribed by Congress and is provided here for informational purposes only.

Afriyie’s attempts to keep his alleged criminal insider trading secret by trading in his mother’s name failed, and thanks to the efforts of the FBI and the SEC, he will now answer to federal securities fraud charges. Afriyie’s alleged disregard for insider trading laws to enrich himself is a serious offense, and the FBI is committed to working with our partners to pursue those who commit these crimes and undermine the public’s confidence in the financial markets, according to FBI Assistant Director-in-Charge Diego Rodriguez.

The case is assigned to United States District Judge Laura Taylor Swain. The charges and allegations contained in the complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.

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