U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19696 / May 11, 2006
SEC v. Sonja Anticevic et al., 05 Civ. 6991 (KMW) (S.D.N.Y.)
SEC Announces New Charges Against Insider Trading Ring - Defendants Traded on Information From Secret Grand Jury Proceedings
On May 11, 2006, the Securities and Exchange Commission sought leave to file a third amended complaint ("Complaint") in its pending action in the United States District Court for the Southern District of New York, alleging new charges against members of an international insider trading ring that netted at least $6.7 million in illicit gains. The new charges add a fourteenth individual defendant, Jason Smith ("Smith"), age 29, a resident of Jersey City, New Jersey and a letter carrier with the U.S. Postal Service. The new charges allege that, while serving on a federal grand jury investigating Bristol-Myers Squibb Co. ("Bristol-Myers"), Smith leaked information about the proceedings to co-defendants Eugene Plotkin ("Plotkin") and David Pajcin ("Pajcin"), who traded in Bristol-Myers securities based on the information. By leaking the information, Smith violated grand jury secrecy rules and his oath as a grand juror.
As alleged in the Complaint, beginning in early 2005, Smith was serving on a federal grand jury in the District of New Jersey convened to investigate potential accounting fraud involving Bristol-Myers and certain officers of that company. Plotkin and Pajcin set up a scheme with Smith 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. Among other things, Smith communicated to Plotkin and Pajcin that it appeared as if a high-ranking Bristol-Myers officer would be indicted, and based on that information, Plotkin and Pajcin traded in an attempt to profit on the negative information, initially in an account in Pajcin's name and later, in a foreign account in the name of his aunt, defendant Sonja Anticevic ("Anticevic"). Plotkin and Pajcin also tipped Plotkin's father, defendant Mikhail Plotkin, and defendant Henry Siegel ("Siegel"), in return for a share of their trading profits. Later, a day before the announcement of a deferred prosecution agreement with Bristol-Myers that did not include an indictment of the high-ranking officer, Smith tipped Plotkin and Pajcin that the grand jury had decided not to return an indictment against the high-ranking officer. Based on this tip, Plotkin and Pajcin caused various accounts to liquidate or cover their positions in an attempt to avoid losses.
This Complaint follows three prior complaints filed by the Commission which charged insider trading resulting in at least $6.7 million of illicit gains from two other schemes orchestrated by Plotkin and 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 total, Plotkin and Pajcin traded in at least 26 stocks within one year based on inside information obtained through these schemes. Today's Complaint alleges that Smith provided Pajcin with some funding for Pajcin's and Plotkin's other insider trading schemes, and Plotkin and Pajcin agreed to provide Smith with a percentage of Pajcin's trading profits based upon information derived from this scheme, as well as other insider trading schemes.
To date, the Commission has charged 14 individuals located in the United States and Europe for their roles in the scheme. Today's filing adds Smith as a defendant. A description of the other defendants is available in the Commission's litigation release dated April 11, 2006, http://www.sec.gov/litigation/litreleases/2006/lr19650.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, Anticevic, 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 United States Attorney's Office for the Southern District of New York, the United States Attorney's Office for the District of New Jersey, and the Federal Bureau of Investigation. The Commission also acknowledges the assistance of the Financial Supervisory Authority in Denmark, the Financial Market Authority in Austria, the Croatian Securities Commission, and the Financial Services Authority in the United Kingdom.