U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19340 / August 19, 2005
Securities and Exchange Commission v. Sonja Anticevic et al., 05 Civ. 6991 (KMW) (S.D.N.Y.)(August 18, 2005)
Court Freezes Additional Accounts Linked to Suspicious Trades in Reebok
On August 5, 2005, the Securities and Exchange Commission obtained a court order freezing a securities account in the name of Sonja Anticevic ("Anticevic"), a Croatian national and resident. The Anticevic account engaged in a series of highly profitable trades in "out of the money" call options of Reebok International Ltd. ("Reebok") just prior to Reebok's August 3, 2005 announcement that it had agreed to be acquired by adidas-Salomon AG. Yesterday, the Court entered a Preliminary Injunction against Anticevic which, among other relief, continues the asset freeze.
On August 18, 2005, the Commission also filed an amended Complaint and obtained Temporary Restraining Orders and other relief against eight other defendants, including residents of the United States, Croatia and Germany trading through several domestic and off-shore accounts. Among others, the amended Complaint charged Anticevic's nephew, David Pajcin of Clifton, N.J., who is a former broker, and alleged that Pajcin placed or directed some of the Reebok trades, and tipped other defendants who placed Reebok trades.
Also charged were:
Henry Siegel ("Siegel"), a resident of Pomona, New York.
Monika Vujovic ("Vujovic"), a resident of New York, New York.
Elvis Santana ("Santana"), a resident of Brooklyn, New York.
Zoran Sormaz ("Sormaz"), a resident of Zagreb, Croatia.
Perica Lopandic ("Lopandic"), a resident of Reinbek, Germany.
Ilija Borac ("Borac"), a resident of Zagreb, Croatia.
Certain Unknown Persons trading in an account at an Austrian broker, Direktanlage.at AG ("Direktanlage").
As alleged in the amended Complaint, the defendants acted in concert or under a common direction in placing the Reebok trades, and collectively netted a profit of over $6 million.
The Commission's amended Complaint alleges the following:
On August 1 and 2, 2005, through four domestic accounts, Anticevic, Siegel, Vujovic, and Santana purchased a total of 4,097 Reebok "out of the money" call options. Collectively, these accounts comprised nearly 80% of the buy volume in Reebok call options on those days. All positions in each account were liquidated after the acquisition announcement on August 3, 2005. In total, the domestic trading netted profits exceeding $4 million.
On those same days, through foreign accounts maintained at the same broker, Anticevic, Sormaz, Lopandic and Borac purchased the equivalent of 145,240 shares of Reebok common stock. Each of those accounts sold all of its Reebok shares on August 3, 2005. On August 2, 2005, an account maintained at an Austrian broker, Direktanlage, purchased 7,545 shares of Reebok common stock, which were also sold on August 3, 2005. Collectively, the proceeds from the foreign trading in Reebok shares were more than $2 million.
In addition to the Reebok trading, overlapping trades were placed at the same time in both the domestic and foreign accounts in the securities of other companies.
Acting on the Commission's request for emergency relief, the United States District Court for the Southern District of New York today issued temporary restraining orders which, among other things, freeze the proceeds of trading in Reebok securities in the domestic accounts and require the repatriation and freezing of the proceeds in the foreign accounts.
As a result of the defendants' conduct, the Commission alleges that the defendants engaged in illegal insider trading in violation of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. Among other things, the Complaint seeks permanent injunctive relief, the disgorgement of all illegal profits, and the imposition of civil monetary penalties.