Ex-Apollo Partner Gets SEC Fraud Judgment Thrown Out on Appeal – Bloomberg

Mohammed Ali Rashid was found liable in 2020 of submitting $290,000 in fraudulent expenses to Apollo funds, getting them to pay for items including trips to Brazil and Hawaii, salon hair cuts, spa treatments and dinners at high-end Manhattan restaurants.

The federal appeals court in Manhattan on Wednesday said he clearly committed fraud but overturned the earlier ruling, saying that the SEC failed to prove he knew the phony expenses would be charged to the Apollo funds, rather than to the firm itself. That distinction was fatal to the regulator’s suit because it was filed under a federal law that protects the clients of investment advisers, the appellate judges said in a 2-1 ruling.

Unless the SEC can get that decision reversed, possibly by the US Supreme Court, the agency will be more restricted in its use of the law, the Investment Advisers Act, in civil enforcement actions going forward.

Source: Ex-Apollo Partner Gets SEC Fraud Judgment Thrown Out on Appeal – Bloomberg