Wall Street Investment Analyst Sentenced To More Than 3 Years In Prison For Insider Trading

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that JOHN AFRIYIE, a former analyst at a Manhattan-based private investment fund (the “Fund”), was sentenced today in Manhattan federal court to 45 months in prison for committing insider trading.  AFRIYIE was convicted on January 30, 2017, following a jury trial before U.S. District Court Judge Paul A. Engelmayer, who also imposed today’s sentence.   

Manhattan U.S. Attorney Kim said: “On more than two dozen occasions, John Afriyie traded on material nonpublic information, and then used his own mother and destroyed emails to cover up his crimes. The heavy price of the illegal edge Afriyie sought was his liberty.”

According to the Indictment, other filings in Manhattan federal court and the evidence presented at trial:

In January 2016, Apollo Investment Management LLC (“Apollo”) contacted the Fund to discuss the possibility of the Fund providing debt financing for Apollo’s potential acquisition of ADT Corporation (“ADT”). The Fund entered into a non-disclosure agreement with Apollo and was granted access to confidential documents related to 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, AFRIYIE repeatedly 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 before the public announcement of that transaction. AFRIYIE purchased the ADT call options through a brokerage account that AFRIYIE controlled, but was held in the name of AFRIYIE’s mother. As cover for his criminal scheme, AFRIYIE repeatedly pretended to be his mother in recorded telephone calls with his broker.  AFRIYIE did not 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 hit $39.64 per share, up from its value of $29.20 per share on the day AFRIYIE began purchasing ADT options.  Upon subsequently selling the ADT options, AFRIYIE generated more than $1.5 million in illicit profits.

In connection with his arrest, AFRIYIE lied to agents of the Federal Bureau of Investigation (“FBI”) about his ADT options trades and falsely claimed that his own voice on a recorded call with his broker was really his mother’s voice.  Following his arrest, AFRIYIE also attempted to delete the contents of an email account that he had used to communicate with his broker.

After the guilt phase of the trial had concluded, and based on AFRIYIE’s request, the jury also determined that $2,648,862.46 in seized funds were subject to forfeiture as proceeds of AFRIYIE’s crimes.    

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In addition to his prison term, AFRIYIE, 29, of Freehold, New Jersey, was sentenced to three years of supervised release, ordered to pay a forfeiture money judgment in the amount of $2,780,720.02, including the forfeiture of $2,705,128.66 in seized funds, and restitution to the Fund in an amount no less than $691,046.42, with a final restitution order to be entered within 90 days of sentencing.  AFRIYIE was remanded on January 23, 2017, after he refused to appear in court for trial, and he remains in custody. 

Mr. Kim praised the investigative work of the FBI and the Office’s Criminal Investigators.  He also thanked the Securities and Exchange Commission for its assistance. 

This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Edward A. Imperatore and Christine I. Magdo are in charge of the prosecution.  Assistant U.S. Attorney Jennifer L. Gachiri is handling the forfeiture aspects of this prosecution.