Securities News: Citigroup Settles Libor Lawsuit for $130M, Apollo Global is Sued for Fraud, and Ex-MSD Capital Analyst is Sentenced After Insider Trading

Citigroup to Pay Plaintiffs Suing Over Libor Rigging
Citigroup Inc. (C) will resolve a private US antitrust lawsuit alleging Libor manipulation by paying plaintiffs $130M. The litigation was brought by “over-the-counter” investors who engaged in direct transactions with banks that belonged to the panel that determines London Interbank Offered Rate.

As part of the proposed preliminary settlement, the bank will pay the money to a fund for future class members. It also will cooperate with the lawsuits brought against other banks also accused of involvement in Libor rigging. Despite settling the case, however, Citigroup is not admitting or denying any wrongdoing.

Investors, which include Yale University, the Maryland city of Baltimore, exchange-based plaintiffs, bondholder plaintiffs, and others have accused 16 banks of Libor rigging allegations in private lawsuits that have been brought since 2011. In 2015, Barclays Plc (PLC) arrived at a similar settlement with OTC investors over Libor manipulation claims for $120M.

Banks employ Libor to establish rates on hundreds of trillions of dollars of mortgage, credit card, and other types of transactions, as well as to figure out how much it will cost to borrow funds from one another. The Libor rigging scandal several years ago exposed that it was traders at these financial institutions who colluded together to manipulate the benchmark to their banks’ benefit. Since then, some of the world’s biggest banks have paid over $9B in total to settle Libor manipulation charges, including UBS (UBS), Deutsche Bank (DB), and Royal Bank of Scotland (UBS).

Last month, UK Financial Conduct Authority head Andrew Bailey announced that Libor would be phased out by 2021.

Apollo Global Accused of $20M Fraud
The private equity firm Apollo Global Management Group is being sued for fraud. The lawsuit, brought in Florida federal court, accuses the firm of trying to “swipe” a $20M stake in Ceva, a Dutch logistics company. According to the complaint, Apollo set up a debt-for-equity restructuring of Ceva without telling that company’s management. It then purchased a substantial amount of Ceva’s discounted debt before a debt-equity swap.All of this purportedly allowed Apollo Global Management to keep its ownership of Ceva while the equity held by its former executives, which was worth $20M, was rendered “worthless.”

Former MSD Capital Analyst Gets Three-Year, Nine-Month Prison Term For Insider Trading
John Afriyie, an ex-New York securities analyst, must serve time in prison and pay almost $2.8M of restitution after he was convicted of wire fraud and securities fraud when he engaged in insider trading involving a planned deal with Apollo Global Management.

Afriyie, who worked for MSD Capital, is accused of inappropriately using security information about the deal, which his former firm was thinking about financing. He has been behind bars ever since January when he refused to go to court for his trial.

Afriyie was arrested last year after prosecutors learned that as an employee of MSD Capital, he and other employees were notified that they would not be allowed to trade in ADT stock. As an MSD Capital employee, Afriyie had learned that Apollo intended to pay $7B to purchase security company ADT Corp. and, potentially, with MSD Capital’s help.

Prosecutors contend that Afriyie went on MSD’s network server to get information about the upcoming deal before purchasing $24,254 of ADT call options through a brokerage account under his mother’s name. He made over $1.5M when the deal was made public.

Citigroup to pay $130 million to end Libor rigging lawsuit in U.S., Reuters, August 7, 2017

Leon Black’s Apollo Global sued over alleged fraud, New York Post, August 4, 2017