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U.S. Securities and Exchange Commission

Litigation Release No. 21860 / February 16, 2011

Securities and Exchange Commission v. Lorenz Kohler and Swiss Real Estate International Holding AG, Defendants, and Sacho Todorov Dermendjiev, Relief Defendant, Civil Action No. 06-4540 (E.D. Pa. June 8, 2009)

Court Enters Final Judgments Against Swiss Defendants and Bulgarian Relief Defendant in Insider Trading Case

The Securities and Exchange Commission today announced that, on January 25, 2011, the U.S. District Court for the Eastern District of Pennsylvania entered Final Judgments against Swiss Defendants Peter Kohler and Swiss Real Estate International Holding AG (Swiss Real Estate), and Bulgarian Relief Defendant Sacho Todorov Dermendjiev (Dermendjiev) in the Commission’s action alleging insider trading by Lorenz Kohler (Kohler) for his own account and for the accounts of Swiss Real Estate and Dermendjiev in advance of the October 9, 2006 public announcement of a $566 million merger between CNS, Inc. (CNS) and GlaxoSmithKline plc. Kohler died in 2010, while the Commission’s action against him was pending. His son, Peter Kohler, as the representative of Kohler’s heirs, subsequently consented to be substituted for his father as a defendant in the pending action. Neither Peter Kohler nor relief defendant Dermendjiev were charged with federal securities law violations. The Final Judgments order the Defendants collectively to pay disgorgement of $374,655. The Defendants and Relief Defendant consented to the entry of Final Judgments against them, without admitting or denying the allegations in the Commission’s First Amended Complaint, except as to jurisdiction.

In its First Amended Complaint, filed on June 8, 2009, the Commission alleged that Kohler, a Swiss national, purchased out-of-the-money call options in CNS in his personal account and in an account in the name of Swiss Real Estate, a company controlled by Kohler, based on material non-public information relating to the company's potential acquisition. The Commission also alleged that Kohler purchased call option contracts on CNS stock for Dermendjiev's account just prior to announcement of the acquisition of CNS and sold these options immediately after announcement of the CNS acquisition. The First Amended Complaint named Dermendjiev, a Bulgarian national, as a relief defendant.

The First Amended Complaint superseded the Commission's original complaint in this action, which was filed on an emergency basis against purchasers of CNS call options whose identities were not, at that time, known to the Commission. See Securities and Exchange Commission v. One or More Unknown Purchasers of Call Options for the Common Stock of CNS, Inc. (Litigation Release No. 19867 / October 13, 2006).

The Final Judgments order Peter Kohler to pay disgorgement of $85,631, Swiss Real Estate to pay disgorgement of $214,369, and Dermendjiev to pay disgorgement of $74,655.

The Commission acknowledges the assistance of the Swiss Financial Market Supervisory Authority (FINMA) in the investigation of this matter.

See also Litigation Release No. 21075 (June 9, 2009); Litigation Release No. 19867 (October 13, 2006).



Modified: 02/16/2011