NEW YORK (Reuters) - A former analyst at Michael Dell’s New York-based investment fund went on trial on Tuesday for insider trading, a day after being arrested for refusing to show up in court.
John Afriyie, 29, misused secret information about a deal that MSD Capital, named for the Dell Inc founder, was mulling whether to finance, turning a roughly $24,000 investment into $1.5 million, Assistant U.S. Attorney Christine Magdo told a federal jury in Manhattan.
Magdo said that using an account in his mother’s name, Afriyie bought call options for ADT Corp in early 2016 after learning that private equity firm Apollo Global Management LLC had approached MSD about financing a deal for Apollo to acquire the security company.
“Like a student who gets the answers ahead of an exam, Afriyie cheated,” Magdo said.
According to prosecutors, when Apollo’s nearly $7 billion acquisition of ADT was publicly announced on Feb. 16, ADT shares jumped, enabling Afriyie to earn at least $1.53 million in profit.
But Susan Wolfe, a lawyer for Afriyie, argued that the Cornell University graduate was betting, not trading on a sure thing.
She said most of his investments were made after the so-called inside information had become “old information,” supplanted by new developments, such as MSD turning the deal down and Apollo saying that funding for deals had dried up.
“He was gambling, pure and simple,” she said.
The case was the latest to go to trial in a series of insider trading prosecutions pursued by Manhattan U.S. Attorney Preet Bharara’s office.
The jury trial had been scheduled to begin on Monday. But Afriyie refused to come to court, prompting the U.S. Marshals Service to arrest him at a motel in East Windsor, New Jersey, later in the day.
Ezra Spilke, one of Afriyie’s lawyers, told U.S. District Judge Paul Engelmayer on Monday that his client’s failure to appear arose from a “misguided attempt to fire his counsel” and a misunderstanding about the state of the case.
Engelmayer as a result revoked Afriyie’s $200,000 bond. And after hearing from Afriyie behind closed doors, Engelmayer said he had given “wilfully untrue” reasons for not appearing and denied his request for new lawyers.
Afriyie has pleaded not guilty to charges of securities and wire fraud. His trial is expected to last into next Monday, Engelmayer told jurors.
The case is U.S. v. Afriyie, U.S. District Court, Southern District of New York, No. 16-cr-337.
Reporting by Nate Raymond in New York; Editing by Phil Berlowitz