Acting on the Commission's request, the United States District Court for the Southern District of New York today issued temporary restraining orders that 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.
Mark K. Schonfeld, the Director of the Commission's Northeast Regional Office, said, "Once again, we have taken immediate action to prevent the dissipation of ill-gotten profits both within and outside the United States. This will preserve the proceeds of the trading pending resolution of this case."
On August 5, the Commission obtained a court order freezing a securities account in the name of Sonja Anticevic, a Croatian national and resident, in which a series of highly profitable and timely trades of "out of the money" Reebok call options occurred in the two days prior to an August 3 announcement that Reebok had agreed to be acquired by adidas-Salomon AG. Today, the Court entered a Preliminary Injunction against Anticevic which, among other relief, continues the asset freeze.
Today, the Commission also filed an amended complaint charging eight other defendants, including Anticevic's nephew, David Pajcin of Clifton, N.J. The amended complaint alleges that Pajcin, a former broker, placed or directed some of the Reebok trades, and tipped other defendants who placed Reebok trades. The Commission also alleges that the defendants acted in concert or under a common direction in placing the Reebok trades, and collectively netted a profit of over $6 million.
Also charged were:
Henry Siegel, a resident of Pomona, N.Y.
Monika Vujovic, a resident of New York, N.Y.
Elvis Santana, a resident of Brooklyn, N.Y.
Zoran Sormaz , a resident of Zagreb, Croatia.
Perica Lopandic, a resident of Reinbek, Germany.
Ilija Borac, a resident of Zagreb, Croatia.
Certain Unknown Persons trading in an account at an Austrian broker, Direktanlage.at AG.
According to the Commission's amended complaint, on August 1 and 2, 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. 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. On August 2, an account maintained at an Austrian broker, Direktanlage, purchased 7,545 shares of Reebok common stock, which were also sold on August 3. Collectively, the proceeds from the foreign trading in Reebok shares was 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.
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.
See also: Litigation Release
