A man was arrested and charged with insider trading after prosecutors say he made $1.5 million through trading options in ADT’s stock around the time of its acquisition by Apollo Global Management.
The accused, 28-year-old John Afriyie, made the gains through his mom’s brokerage account while working at a private New York investment fund, according to prosecutors.
The fund was not named in the complaint, but a report links Afriyie’s LinkedIn page to hedge fund MSD Capital. Business Insider reports that in January, Apollo Investment Management discussed debt financing with MSD in January for acquiring ADT Corp. in an all-cash deal.
According to the report, MSD received access to an “electronic data room” on the ADT deal after entering into a nondisclosure agreement with Apollo. Prosecutors say Afriyie accessed nonpublic information about the pending acquisition in a shared drive folder on his employer’s server.
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Allegedly, Afriyie bought 2,279 ADT call options for more than $24,000 using his mother’s brokerage account — one that he controlled — when ADT’s stock was trading from $24 to $28 per share during that time, the report says. When Apollo acquired ADT on Feb. 16, the stock closed at $39.64 and call options also increased in value.
Now, Afriyie is facing a maximum of 20 years in prison and maximum fine of $5 million after being charged with one count of securities fraud.
“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,” said U.S. Attorney Preet Bharara in a statement.
