SEC WINS TRIAL AGAINST FORMER APOLLO MANAGEMENT EXECUTIVE

Following a nine-day bench trial during which thirty-three witnesses testified, U.S. District Judge P. Kevin Castel ruled that Mohammed Ali Rashid (“Rashid”), a former Apollo Management LP (“Apollo”) executive, violated section 206(2) of the Investment Advisers Act of 1940 by falsifying expense reports for personal spending and being reimbursed by private equity funds.  (Apollo is an indirect subsidiary of Apollo Global Management, LLC.)  As a result, Rashid was ordered to pay a $240,000 penalty, concluding the U.S. Securities and Exchange Commission (“SEC”) case that was filed nearly three years ago.  The penalty represents $7,500 for each of the thirty-two violations that the SEC proved at trial. 

Interestingly, the SEC and Rashid agreed in 2019 to waive trial by jury and opt for a bench trial.  During trial, Judge Castel reviewed emails between Rashid and others detailing his personal travel and spending.  The judge also looked at expense descriptions entered into Apollo’s reimbursement software.  

"Weighed in their entirety, Rashid's expense reports contained a pattern of lies," the judge said. "He commonly fabricated attendees and business purposes for expensive restaurant dinners, repeatedly naming portfolio company executives who credibly testified that they were halfway across the country on the dates of the dinners."  Notably, the court found that the SEC proved that Rashid was reimbursed for a New Year's trip to Brazil, a friend's bachelor party in Montreal and wedding in Miami, and a flight to New Orleans for the Super Bowl, as well as expensive clothing and numerous dinners with friends and family at exclusive Manhattan restaurants.

Prior to the SEC’s filing of this suit in 2017, Apollo paid $52.7 million to settle other SEC allegations including that the company failed to properly supervise Rashid.
The case is SEC v. Rashid, No. 1:17-cv-08223 (S.D.N.Y.).  A link to the court’s ruling can be found here.