The Commission further alleges that Kohler tipped his wife and his brother-in-law, who then traded in CNS options in advance of the announcement of the acquisition of CNS. The amended complaint also names Sacho Todorov Dermendjiev, a resident of Bulgaria, as a relief defendant. The Commission alleges that Dermendjiev, who resides in Bulgaria, was the beneficial owner of banking and securities accounts over which Kohler held power of attorney. According to the amended complaint, Kohler purchased option contracts on CNS stock for Dermendjiev's account just prior to announcement of the acquisition of CNS and sold these options immediately after announcement of the CNS acquisition, resulting in illicit gains of $74,655 for Dermendjiev.

According to the amended complaint, Kohler has engaged in a pattern of highly suspicious trading both prior to and immediately after the trades in CNS securities that are charged in the amended complaint. During late 2005 and 2006, Kohler and a group of his friends and relatives also traded in the securities of five other public companies in advance of acquisitions or earnings announcements. The Commission alleges that Kohler and his circle of traders realized over $5 million in profits on these trades.

In the pending lawsuit, the Commission alleges that Kohler and Swiss Real Estate engaged in illegal insider trading in violation of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. The Commission seeks permanent injunctive relief, the disgorgement of all illegal profits, and the imposition of civil monetary penalties.

The amended complaint supersedes the Commission's original complaint in this action, which was filed on an emergency basis against purchasers of CNS call options whose identities were not, at that time, known to the Commission.

For further information see SEC v. One or More Unknown Purchasers of Call Options for the Common Stock of CNS, Inc., Civil Action No. 06-4540 (Eastern District of Pennsylvania) (LR-19867, Oct. 13, 2006). [SEC v. Lorenz Kohler and Swiss Real Estate International Holding AG, Defendants, and Sacho Todorov Dermendjiev, Relief Defendant, Civil Action No. 06-4540 (E.D. Pa.) ] (LR-21075)