Lawsuit: Apollo Global Management, Directors Rob Investors Dry

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Two directors of CEVA Investments Limited (CIL) and its majority shareholder, Apollo Global Management, LLC, are facing claims that they fraudulently initiated a restructuring plan of CIL that ultimately robbed investors of the value of their shares.

According to the suit, the defendants provided management-level employees of what would become CEVA Logistics with an opportunity to purchase restricted stock in a company that would eventually be known as CEVA Investments Limited (CIL), a separate entity.

In 2013, however, the defendants allegedly initiated a restructuring plan that proposed to “extinguish the equity” of proposed class members, i.e. employee investors, in order to clear CIL’s debt. In particular, the complaint claims Apollo and the CIL directors represented to investors that, in light of CIL’s financial state, their shares in the company had no value whatsoever. In truth, the suit argues, these representations were fraudulent, as evidenced by the “deliberately manipulated and incomplete financial information” used in valuation analyses of the company.

Nevertheless, the defendants “knowingly and willfully” transferred equity from CIL into CEVA Holdings, thereby “retaining equity value in and majority control in [the company] for themselves.”

“In so doing,” the complaint continues, “Defendants abused their positions for their own financial benefit and used special inside knowledge obtained by virtue of their respective positions, which they failed to share with the Employee Investors, to take advantage of the minority shareholders who constitute the Employee Investors.”