The Securities and Exchange Commission yesterday froze more than $2 million made by a 63-year-old retired Croatian woman who the agency alleges engaged in illegal insider trading in options of Reebok International Ltd.
The SEC said she made the trades just before the sneaker company disclosed Wednesday that rival Adidas-Salomon AG would buy it for $3.8 billion.
The SEC, in a filing for the temporary restraining order with a federal court in New York, said a securities account in Sonja Anticevic's name ''engaged in a series of highly suspicious, and highly profitable, trades" in options that would be valuable if Reebok's shares rose quickly and significantly, which they did after its deal with Adidas was made public.
Generally, insider trading occurs when a person buys or sells securities, such as stock or options, based on market-moving information that he or she had access to but had not been released to the public.
The SEC in its filing didn't say how Anticevic allegedly gleaned advance information on the Reebok deal. Anticevic, who had never previously traded Reebok options, purchased nearly 2,000 of these options for Reebok stock on Monday and Tuesday for $130,000 through CyberTrader Inc., a broker-dealer subsidiary of Charles Schwab & Co.
These trades represented about 38 percent of all call options traded those days, according to court documents.
On Wednesday, after Reebok disclosed its merger with Adidas, Reebok's stock jumped 30 percent and Anticevic's account immediately liquidated its call options and netted profit of more than $2 million.
Shortly after the sale of the options contracts, the brokerage firm received a wire instruction request to transfer about $870,000 of the proceeds from the Reebok trades to a bank account in Salzburg, Austria, the SEC said.
At the request of the SEC, the US District Court for the Southern District of New York yesterday issued a temporary restraining order, which freezes the proceeds of Anticevic's Reebok trades to block the movement of these funds outside of the country -- where they would be beyond the jurisdiction of US courts.
''We have reason to believe she was in possession of material, nonpublic information about Adidas's proposed acquisition of Reebok," said David Rosenfeld, the SEC's associate regional director of the Northeast Regional Office.
Anticevic could not be reached to comment. A hearing on the temporary restraining order is set for Thursday.
SEC officials included the woman's street address in Croatia in their complaint. Reuters contacted a 63-year-old woman named Sonja Anticevic by telephone at that address.
She said she had no familiarity with the SEC allegations. ''I don't know what the stock exchange is about," she told Reuters, speaking in Croatian.
Denise Kaigler, a Reebok spokeswoman, said she does not believe Anticevic is a Reebok employee.
Greg Gable, a Charles Schwab spokesman, said the company is cooperating with the SEC.
Overall, there was heavy trading of Reebok options before the acquisition was made public. About 3,674 contracts for Reebok were traded on Monday and another 5,000 were traded on Tuesday -- significantly more than the roughly 170 contracts that changed hands across all of the US options exchanges on average each day last week, according to the Options Clearing Corp., which clears US-listed options.
Two weeks prior, however, about 7,768 contracts were traded in one week. Over the past year, an average of 510 Reebok options were traded per day, according to an Options Clearing spokesman.
Jenn Abelson can be reached at firstname.lastname@example.org.