Ex-MSD Capital Analyst Convicted of Insider-Trading Charges

  • Afriyie made $1.5 million on trades using inside information
  • Jury took less than three hours to reach verdict in New York

A New York federal jury took less than three hours to convict a former MSD Capital LP analyst who made $1.5 million by trading on confidential information about Apollo Global Management LLC’s takeover last year of ADT Security Services.

John Afriyie, 29, was found guilty of securities fraud and wire fraud and faces having to give up $2.6 million from his brokerage and bank accounts. The government alleged he used profits from the ADT trades to score more gains on other investments.

Apollo had approached MSD about providing financing for the deal and gave the firm access to the electronic "data room" containing the deal information, including sensitive details such as the anticipated closing date and the price target. Afriyie wasn’t assigned to work on the deal, but prosecutors said he accessed the room more than 200 times -- while placing trades from his iPhone that would pay off if ADT shares rose.

Afriyie’s lawyers maintained his trades didn’t amount to insider trading because the data in MSD’s possession weren’t material, non-public information under the law.

Afriyie bought $25,000 in call options on ADT shares at strike prices in the mid-$30 range. The shares were trading in the mid-$20 range at the time, but rocketed about 50 percent higher when the deal was announced. He spent some of the proceeds on custom shoes, partying at trendy nightclub 1 Oak and travel to Los Angeles and elsewhere.

MSD had a policy against employees trading in individual shares, so Afriyie used a TD Ameritrade in his mother’s name to place the trades. Jurors heard audio tapes in which Afriyie called TD to discuss the account pretending to be his mother, at times using a high-pitched voice -- to ask how his computer’s IP address was being traced and whether trades from a phone were tracked.

Afriyie "abused his position as a trusted employee at MSD by stealing information and using it to make money for himself in the stock market," prosecutor Edward Imperatore told the jury in the government’s closing argument Monday. "He knew what he was doing was wrong and illegal."

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