U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19775 / July 26, 2006
SEC v. Sonja Anticevic et al., 05 Civ. 6991 (KMW) (S.D.N.Y.)
SEC Identifies Three Additional Europeans Who Participated in Insider Trading Ring
On July 26, 2006, the Securities and Exchange Commission ("Commission") sought leave to file a fourth amended complaint ("Complaint") charging three additional defendants in SEC v. Sonja Anticevic, et. al. The Complaint identifies six individuals who engaged in insider trading through an Austrian bank, Direktanlage.at AG ("Direktanlage"). The individuals were previously charged as "Certain Unknown Persons Trading In Reebok International Ltd. Securities In Account 34401046 At Direktanlage.at AG."
According to the Complaint, the individuals who traded through Direktanlage were: (i) Bruno Verinac ("Verinac"); (ii) Antun Dilber ("Dilber"); (iii) Anto Krsic ("Krsic"); (iv) Perica Lopandic ("Lopandic"); (v) Ilija Borac ("Borac"); and (vi) Zoran Sormaz ("Sormaz") (collectively, the "Direktanlage Traders"). Verinac, age 37, a Croatian national, residing in Germany, Dilber, age 67, a Croatian national, residing in Croatia, and Krsic, age 62, a Croatian national, residing in Croatia, are named as defendants for the first time. Lopandic, Borac, and Sormaz were previously charged for their trading through other European accounts.
The complaint also identifies additional insider trading by the Direktanlage Traders based on newly-obtained information, bringing the total illicit gains netted by the insider trading ring to over $6.8 million. In total, the Direktanlage Traders netted over $445,000 of these illicit gains in trades placed in 17 different securities through Direktanlage based on material, non-public information stolen by a former investment banker employed at Merrill Lynch & Co., Inc. ("Merrill Lynch") and two former employees at a printing plant where BusinessWeek magazine is printed.
This Complaint follows four prior complaints filed by the Commission that charged insider trading resulting in at least $6.7 million of illicit gains from three schemes orchestrated by defendants Eugune Plotkin ("Plotkin") and David Pajcin ("Pajcin"). In the first scheme, Stanislav Shpigelman ("Shpigelman"), a mergers and acquisitions analyst at Merrill Lynch, provided Plotkin and Pajcin with information about pending mergers and acquisitions deals on which Merrill Lynch was working, prior to the time such information became public in exchange for a share of the profits made from trades based on this information. In the second scheme, Plotkin and Pajcin recruited two individuals, first Nickolaus Shuster, and later Juan C. Renteria, Jr., to obtain employment at a printing plant which prints BusinessWeek magazine for the sole purpose of stealing advance copies of the magazine before it was distributed to the public. Plotkin and Pajcin then traded on the basis of a market moving column in the magazine and tipped others to trade in exchange for a percentage of their trading profits. In the third scheme, Plotkin and Pajcin set up a scheme with Jason C. Smith ("Smith") - who was serving on a federal grand jury in the District of New Jersey convened to investigate potential accounting fraud involving Bristol-Myers Squibb Co. ("Bristol Myers") - in which Smith leaked information about the grand jury proceedings to Pajcin and Plotkin in order to enable them to trade on this non-public information. In total, Plotkin and Pajcin traded in - or tipped others, including the Direktanlage Traders - in at least 27 stocks within one year based on inside information obtained through these schemes.
With today's filing, the Commission has now charged a total of 17 individual defendants, located in the United States and Europe, as participants in the insider trading ring. Descriptions of the other defendants are available in the Commission's litigation releases dated April 11, 2006, http://www.sec.gov/litigation/litreleases/2006/lr19650.htm, and May 11, 2006, http://www.sec.gov/litigation/litreleases/2006/lr19696.htm.
The Commission alleges that, as a result of trading in various securities on the basis of material, non-public information obtained pursuant to the grand jury and other schemes, the defendants engaged in illegal insider trading in violation of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and that defendants Smith, Pajcin, Plotkin, Sonja Anticevic, Henry Siegel, and Mikhail Plotkin also violated Section 17(a) of the Securities Act of 1933 by virtue of their insider trading in Bristol-Myers. In addition, the Commission alleges that defendants Plotkin, Pajcin, and Shpigelman violated Section 14(e) of the Exchange Act and Rule 14e-3 thereunder by trading in the stock of a company while in possession of material, non-public information related to a cash tender offer for such company's stock. Among other things, the Complaint seeks permanent injunctive relief, the disgorgement of all illegal profits plus prejudgment interest, the imposition of civil monetary penalties, and orders requiring the defendants to repatriate to the United States proceeds of the fraud in accounts outside the United States.
The Commission acknowledges the assistance of the Austrian Financial Market Authority in helping to identify the individual defendants.