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US broker accused of insider trading
WASHINGTON/NEW YORK - The FBI has arrested a former stockbroker and accused him of insider trading using stolen advance copies of Business Week magazine, according to a court complaint released on Wednesday.
David Pajcin, the ex-broker, was named in August in a separate civil case brought by securities regulators for his role in alleged trading misconduct and phony identities involving Reebok International options.
At a hearing late on Wednesday, Pajcin was released on a $500,000 personal recognizance bond that needs to be co-signed by four people and secured by $50,000 in cash or property.
Prosecutors said at the hearing that Pajcin had fled the United States to the Dominican Republic to avoid prosecution but his lawyer, Paul Lieber, said that Pajcin was there on vacation and had returned to face and fight the charges.
Pajcin allegedly told a cooperating witness in the case that someone at a Business Week printing plant in the Milwaukee, Wisconsin, area "was providing him with the publication prior to its release to newsstands."
The court complaint alleged that Pajcin bought securities in TheStreet.com, BioLase Technology, Curis Inc., Sipex Corp. and Alltel Corp.
These stocks and five others received positive comments in the magazine column, which was published after markets closed on the same days Pajcin bought the shares, the complaint said.
Pajcin's purchases ranged in size from 3,500 to 21,000 shares and occurred between November 18, 2004, and March 3, 2005, the complaint said.
The other five stocks were Cornell Corrections, Spectrum Pharmaceuticals, Arbitron Inc., Imax Corp. and Impax Laboratories, it said.
Earlier, on August 18, the Securities and Exchange Commission named Pajcin as one of eight additional defendants in a civil lawsuit brought in the same court in Manhattan.
The SEC lawsuit alleged insider trading in Reebok share options through a network of personal and online connections stretching from Croatia and Germany to New York and London.
Pajcin, identified by the SEC as a 28-year-old ex-broker formerly associated with several brokerages, "placed or directed some of the Reebok trades ... and tipped others."
The SEC on August 5 froze an online brokerage account in the name of Sonja Anticevic, a retired woman living in the small city of Omis on the coast of Croatia.
Described by Croatian newspapers as a former underwear factory worker, Anticevic was accused by the SEC of insider trading in Reebok options ahead of news that the sports gear maker would be acquired by Adidas-Salomon AG.
Contacted at her home, Anticevic in August told Reuters she knew nothing of the SEC charges or stock markets.
Pajcin is the nephew of Anticevic, according to the SEC.
Sources close to the case have told Reuters the SEC was looking into whether the Anticevic account was set up and managed in the Croatian woman's name by someone else.
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