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Justice News

Department of Justice
U.S. Attorney’s Office
Southern District of New York

Wednesday, April 13, 2016

Manhattan U.S. Attorney And FBI Assistant Director Announce Insider Trading Charges Against Analyst At Investment Fund

Preet Bharara, the United States Attorney for the Southern District of New York, and Diego Rodriguez, the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), announced today that JOHN AFRIYIE, a former analyst at a Manhattan-based private investment fund (the “Fund”), was arrested this morning and charged with insider trading.  AFRIYIE made approximately $1.5 million in profits in connection with options trading based on material nonpublic information he misappropriated from the Fund about an impending acquisition of a publicly traded company.  AFRIYIE was presented today in Manhattan federal court before United States Magistrate Judge James L. Cott.            

Manhattan U.S. Attorney Preet Bharara said:  “In February of this year, John Afriyie made a quick $1.5 million profit by trading in options of ADT stock.  His profits were not the result of trading acumen, diligent research, or blind luck, but rather the alleged spoils of criminal insider trading.  Afriyie allegedly traded on material nonpublic information he had obtained about a pending acquisition of ADT that had not yet been made public.  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.”

FBI Assistant Director-in-Charge Diego Rodriguez said: “Afriyie allegedly disregarded insider trading laws to enrich himself.  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 the Complaint filed today Manhattan federal court:[1]           

In January 2016, Apollo Investment Management LLC (“Apollo”) contacted the Fund to discuss whether the Fund would provide debt financing for Apollo’s potential acquisition of ADT Corporation (“ADT”) in an all-cash transaction.  The Fund entered into a non-disclosure agreement with Apollo and was granted access to an electronic data room for the ADT transaction.  As an investment analyst at the Fund, AFRIYIE had access to the Fund’s network server, which maintained, among other things, electronic shared directory file folders containing material nonpublic information, including information about Apollo’s acquisition of ADT. 

In violation of the Fund’s policies and in breach of his duties to the Fund and its clients, 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 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 that transaction.  AFRIYIE purchased the ADT call options through a brokerage account in the name of AFRIYIE’s mother, which AFRIYIE 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 AFRIYE 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.  As a result of the insider trading alleged in the Complaint, AFRIYIE earned at least $1.53 million in realized and unrealized profits.

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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, as any sentencing of the defendant would be determined by the judge.

Mr. Bharara praised the investigative work of the FBI and thanked the SEC, which has filed civil charges in a separate action.  He added that the FBI’s investigation is ongoing.

The charges were brought in connection with the President’s Financial Fraud Enforcement Task Force.  The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it is the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud.  Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions and other organizations.  Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants.  For more information on the task force, please visit                     

This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorney Edward A. Imperatore is in charge of the prosecution.

The allegations contained in the Complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.


[1] As the introductory phrase signifies, the entirety of the text of the Complaint and the description of the Complaint set forth below constitute only allegations, and every fact described should be treated as an allegation.

Updated April 13, 2016