Staff Statement at SEC v. Anticevic Press Conference
by
Mark K. Schonfeld
Director, Northeast Regional Office
U.S. Securities and Exchange Commission
New York, NY
May 11, 2006
Good Morning. When we were here one month ago, I described this case as one of the most widespread insider trading rings we have ever prosecuted. Today's announcement demonstrates just how far and wide the scheme had spread.
Today, the SEC has filed the fourth complaint in this case, adding Jason Smith, a letter carrier with the U.S. Postal Service, as a defendant and bringing to 14, the total number of defendants. Today's charges also reveal a third prong to the defendants' scheme — to trade in the stock of Bristol-Myers Squibb based on information obtained from a secret grand jury proceeding. In 2005, Smith served as a juror on a federal grand jury investigating potential violations of law arising from accounting practices at Bristol-Myers. In violation of grand jury secrecy rules and his oath as a grand juror, Smith communicated to defendants Eugene Plotkin and David Pajcin information about the grand jury proceedings. Specifically, when it appeared to Smith that a high ranking executive of Bristol-Myers might be indicted, an event which was likely to cause the price of Bristol Myers stock to decline, Smith informed Plotkin and Pajcin, who then sold short Bristol-Myers stock and purchased put options in Bristol-Myers stock — bets that the price of Bristol-Myers stock would decline. Subsequently, when it became evident to Smith that the high ranking executive of Bristol-Myers would not be indicted, Smith again notified Plotkin and Pajcin so they could cover or liquidate their positions and thereby avoid losses. Smith also provided money to Plotkin and Pajcin to use in trading in each of the insider trading schemes alleged in return for a share of the profits.
Today's action is the first time that we have brought an insider trading case based on the misuse of confidential information concerning an ongoing grand jury investigation. In this respect, Smith violated not only the securities laws, but also his duty of confidentiality to the people of the United States. The defendants' conduct not only corrupted our securities market, it struck at the heart of our justice system.
Today's case demonstrates just how relentlessly corrupt this insider trading scheme was. The ringleaders seized every opportunity to steal valuable information for personal gain with total disregard for the integrity of our markets and worse, our system of justice.
In closing, I would again like to recognize the tremendous job done by the SEC staff on these investigations, including David Rosenfeld, David Markowitz, Scott Black, Sanjay Wadhwa, Wendy Griffin, Mona Akhtar, Brenda Chang, Melissa Coppola, Elizabeth Baier, Kathy Murdocco and Roseann Daniello. I would also like to thank United States Attorney Michael Garcia and United States Attorney Christopher Christie and the FBI for their assistance and commitment to this investigation.
http://www.sec.gov/news/speech/2006/spch051106mks.htm
