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The 2nd U.S. Circuit Court of Appeals in New York. REUTERS/Caitlin Ochs
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- Firm represented John Afriyie’s former employer
- Defendants on hook for victim’s legal fees in a criminal case
- Court must deduct bills tied to regulator’s parallel civil case
The company and law firm names shown above are generated automatically based on the text of the article. We are improving this feature as we continue to test and develop in beta. We welcome feedback, which you can provide using the feedback tab on the right of the page.
(Reuters) – The 2nd U.S. Circuit Court of Appeals ruled on Friday that a former analyst convicted of insider trading must reimburse his former employer for what it paid Sullivan & Cromwell to work on his criminal case.
U.S. Circuit Court Judge Rosemary Pooler wrote that John Afriyie, who worked at Dell Inc founder Michael Dell’s investment firm MSD Capital, owes the company for legal bills incurred in replying to criminal subpoenas, preparing witnesses for trial and presenting the bills at his restitution hearing.
Prosecutors said Afriyie made more than $1.5 million by trading ahead of Apollo Global Management LLC’s $7 billion deal to buy security company ADT Corp. Apollo had approached MSD about providing financing.
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Afriyie was convicted in 2017 and sentenced to 3 years and 9 months in prison. After being released in 2020, he challenged an order requiring him to pay more than $511,000 in restitution to MSD.
His attorney did not immediately reply to a request for comment on Friday.
The appeals court said the legal bill is valid under the Mandatory Victims Restitution Act, which requires some defendants to reimburse victims for the cost of participating in the criminal case.
However, Pooler, joined by Judges Barrington Parker and Guido Calabresi, said the law does not cover bills for responding to subpoenas in a parallel civil case brought by the U.S. Securities and Exchange Commission.
The court sent the case back to U.S. District Judge Paul Engelmayer in Manhattan to find a “reasonable” way to differentiate between work on the criminal and civil cases.
The ruling interpreted the U.S. Supreme Court’s 2018 decision Lagos v. United States. That decision held that victim companies cannot recoup expenses from their own internal investigations under the MVRA.
The case is U.S. v. Afriyie, 2nd U.S. Circuit Court of Appeals, No. 20-2269.
For Afriyie: Robert Culp
For the government: Christine Magdo and Thomas McKay
Read More:
Former N.Y. fund analyst arrested for skipping insider trading trial
Ex-New York analyst gets 3 years and 9 months for insider trading
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The 2nd U.S. Circuit Court of Appeals in New York. REUTERS/Caitlin OchsRegister now for FREE unlimited access to Reuters.comSummaryLaw firmsRelated documentsFirm represented John Afriyie’s former employerDefendants on hook for victim’s legal fees in a criminal caseCourt must deduct bills tied to regulator’s parallel civil caseThe company and law firm names shown above are generated automatically based on the text of the article. We are improving this feature as we continue to test and develop in beta. We welcome feedback, which you can provide using the feedback tab on the right of the page.(Reuters) – The 2nd U.S. Circuit Court of Appeals ruled on Friday that a former analyst convicted of insider trading must reimburse his former employer for what it paid Sullivan & Cromwell to work on his criminal case.U.S. Circuit Court Judge Rosemary Pooler wrote that John Afriyie, who worked at Dell Inc founder Michael Dell’s investment firm MSD Capital, owes the company for legal bills incurred in replying to criminal subpoenas, preparing witnesses for trial and presenting the bills at his restitution hearing.Prosecutors said Afriyie made more than $1.5 million by trading ahead of Apollo Global Management LLC’s $7 billion deal to buy security company ADT Corp. Apollo had approached MSD about providing financing.Register now for FREE unlimited access to Reuters.comAfriyie was convicted in 2017 and sentenced to 3 years and 9 months in prison. After being released in 2020, he challenged an order requiring him to pay more than $511,000 in restitution to MSD.His attorney did not immediately reply to a request for comment on Friday.The appeals court said the legal bill is valid under the Mandatory Victims Restitution Act, which requires some defendants to reimburse victims for the cost of participating in the criminal case.However, Pooler, joined by Judges Barrington Parker and Guido Calabresi, said the law does not cover bills for responding to subpoenas in a parallel civil case brought by the U.S. Securities and Exchange Commission.The court sent the case back to U.S. District Judge Paul Engelmayer in Manhattan to find a “reasonable” way to differentiate between work on the criminal and civil cases.The ruling interpreted the U.S. Supreme Court’s 2018 decision Lagos v. United States. That decision held that victim companies cannot recoup expenses from their own internal investigations under the MVRA.The case is U.S. v. Afriyie, 2nd U.S. Circuit Court of Appeals, No. 20-2269.For Afriyie: Robert CulpFor the government: Christine Magdo and Thomas McKayRead More:Former N.Y. fund analyst arrested for skipping insider trading trialEx-New York analyst gets 3 years and 9 months for insider tradingRegister now for FREE unlimited access to Reuters.comOur Standards: The Thomson Reuters Trust Principles.Jody GodoyJody Godoy reports on banking and securities law. Reach her at jody.godoy@thomsonreuters.com