New York Litigation, Reebok Overlapping Trades

U.S. Securities and Exchange Commission Litigation Release: August 19, 2005

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.

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.