Insider Case Funds Frozen by SEC Fail to Satisfy Its Claim : Money May Be in Swiss Banks; Triple Damages Sought From Former Merrill Lynch Trader

Accounts held in the United States by a former executive of the Merrill Lynch investment firm and his Israeli associate do not hold enough money to satisfy a claim by the Securities and Exchange Commission, which last week charged the two with insider trading, an SEC lawyer said Friday.

The lawyer also said the defendants had transferred at least $1.9 million to a Swiss bank account two months ago and had intended to transfer an additional $500,000 when their assets were temporarily frozen at the request of the SEC.

Civil Charges Filed

At that time, the SEC filed civil charges against Nahum Vaskevitch, 36, a dual citizen of Israel and Britain who had headed Merrill Lynch’s mergers and acquisitions office in London, and David Sofer, 46, an Israeli citizen and leading Jerusalem real estate and oil investor.

They made nearly $4.2 million in illicit profits, the SEC alleged. Also named in the complaint were two Sofer-controlled investment firms, whose accounts were used in the alleged scheme.

The SEC is asking that the defendants be ordered to return their profits plus three times as much in damages, a total of nearly $16.8 million. Thomas C. Newkirk, the SEC’s chief litigation counsel, said the commission does not know how much money the defendants have in U.S. accounts but estimates the amount to be about $1 million.

If a court rules in favor of the SEC, it will have to obtain the funds from overseas accounts. In recent years, Swiss banking officials have been increasingly willing to cooperate with U.S. requests related to the accounts of people suspected of illegal securities trading practices.

Information on Takeovers

The SEC complaint alleges that from October, 1984, to May, 1986, Vaskevitch and Sofer used inside information about takeover deals in which Merrill Lynch was involved to trade in stocks and options of at least 12 companies. The firm fired Vaskevitch shortly after the SEC made its charges.

A brief court hearing Friday resulted in a 10-day extension of the order freezing the defendants’ assets while the judge reviews more than 1,000 pages of evidence that the SEC has submitted.

Neither Vaskevitch nor Sofer is in the United States, and no representatives for the defense attended the hearing. A lawyer familiar with similar cases said their absence may be an attempt to further a possible claim that U.S. courts do not hold jurisdiction in the matter.