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Leon Black to step down as Apollo CEO after evaluate of Epstein ties By Reuters


© Reuters. Leon Black, Chairman, CEO and Director of Apollo Global Management, LLC, speaks at the Milken Institute’s 21st Global Conference in Beverly Hills

By Mike Spector and Chibuike Oguh

NEW YORK (Reuters) – Leon Black said Monday he would step down as chief executive at Apollo Global Management (NYSE 🙂 Inc, the company he co-founded 31 years ago and became a Wall Street powerhouse after an independent review made his connections to the late financier and convicted sex offender Jeffrey Epstein.

While Black, whose net worth is set at $ 8.2 billion by Forbes, continues to serve as Apollo’s chairman, his decision to step down as CEO shows how the Epstein deal hurt the reputation of one of Wall Street’s best-known investment firms.

Apollo said it plans to change its corporate governance structure and remove shares with special voting rights that Black and other co-founders currently have effective control over the company.

The independent review by the law firm Dechert LLP found that Black was in no way involved in Epstein’s criminal activities. Black paid Epstein $ 158 million between 2012 and 2017 for advice on tax and estate planning and related services.

Black, 69, said although the Dechert review confirmed that he had not committed any wrongdoing, he “deeply regrets” his involvement with Epstein.

“I hope that the results of the review and the related improvements … reassure you that Apollo is committed to the highest levels of transparency and governance,” Black wrote in a statement to investors in the Apollo Fund. He will step down as CEO by July 31 at the latest.

Apollo co-founder, 58, Marc Rowan will take over as CEO. Rowan has often been cautious about Joshua’s other co-founder Joshua Harris, 56, spearheading many of the initiatives that have made Apollo a credit investment giant, including the permanent capital base the company has through its ties to reinsurer Athene Holding (NYSE: ) Ltd.

The revelations of Black’s ties to Epstein took a toll on Apollo, who made Black one of the world’s largest private equity groups. Apollo executives warned in October that some investors had suspended their commitments to the buyout company’s funds while awaiting the results of the review.

Apollo shares have fallen 1% since the New York Times reported Oct. 12 that Black was paying Epstein at least $ 50 million for advice and services when most of his clients left him.

Since the New York Times reported Oct. 12 that Black Epstein paid at least $ 50 million for advice and services when most of his clients left him, Apollo stock has fallen 1% and is on a rally Missed Wall Street.

During the same period, shares in Peers Blackstone Group (NYSE 🙂 Inc, KKR & Co (NYSE 🙂 Inc and Carlyle Group (NASDAQ 🙂 Inc are up 19%, 10% and 23%, respectively.

“We believe that a large number of (Apollo Fund Investors) have taken a hiatus, and we believe the outcome (of the review) and today’s changes will result in most of them being reassigned to future Apollo Funds . ” Swiss credit (SIX 🙂 Analysts wrote a research note.

Apollo shares rose 4% to $ 47.65 on Monday after close of trading.

“We are continuing to monitor these events closely and will evaluate how Apollo is addressing its problems,” the California State Teachers’ Retirement System, one of the largest US public pension funds and an Apollo investor, said in a statement.

Epstein was found dead in a Manhattan prison in August 2019 at the age of 66. He was awaiting trial for sex trafficking for alleged abuse of dozens of underage girls in Manhattan and Florida from 2002 to 2005. The New York City Medical Director ruled that the cause of death was suicide by hanging.


Black previously said he paid Epstein millions of dollars, but the exact amount of his payments was first revealed on Monday. In addition to payments of $ 158 million, Black Epstein made two loans totaling $ 30.5 million in early 2017.

Dechert said in his report that Schwarz’s social relationships with Epstein, who built his fortune by endearing himself to powerful high society figures, date back to the mid-1990s. Epstein won Black’s trust by solving an estate tax problem for him in 2012 that was potentially worth at least $ 500 million, the report said. He ended up advising Black on various aspects of his personal financial affairs, from his family office and airplane to his yacht and artwork.

Black believed that Epstein had provided advice over the years that would have earned him between $ 1 billion and $ 2 billion, according to the Dechert report. Black said in his notice to investors that he paid Epstein a fee of 5% of the after-tax value and was not tied to hourly rates.

Black and Epstein’s relationship worsened after Epstein failed to repay $ 20 million of the loan and Black refused to pay the tens of millions in fees requested by Epstein, according to the Dechert report.

According to the report, they split in October 2018. Black knew that Epstein had been convicted a decade earlier in Florida for soliciting prostitution from a minor, the Dechert report said, but there was no evidence that Black was previously aware of the other alleged crimes they became Publicly reported at the end of 2018 and culminated in Epstein’s arrest in July 2019.

On Monday, Black pledged $ 200 million for “Initiatives to Achieve Gender Equality and Protect and Empower Women” and to support survivors of domestic violence, sexual assault and human trafficking.

Apollo said it would have a one-share, one-vote corporate governance structure that would abolish shares with special voting rights. The move could qualify it for listing on the S&P Global (NYSE 🙂 indices.

Apollo also said it will seek to give its board more powers to oversee its business, undermining the power of its Black-led executive committee.

Four new independent directors will be added to the board, including Avid Partners founder Pamela Joyner and doctor and scientist Siddhartha Mukherjee, Apollo said. Apollo co-presidents Scott Kleinman and James Zelter will join the board and assume greater responsibility for day-to-day operations.

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