The Israel Securities Authority has arrested Eden Springs Ltd. (Maayanot Eden) (TASE: MEYD) shareholder Giora Naftali on charges of insider trading. Also arrested were three of his associates, including his business partner, and a former Eden Springs employee.
The Securities Authority has been investigating the case for several months. It suspects that on the eve of the publication of the cooperation agreement between Eden Springs and Groupe Danone (NYSE:DA; XETRA; Paris:DANO), Naftali provided his associates with information about the agreement, after which they bought Eden Springs shares, making a profit. The men are suspected of serious violations of the Securities Law (5728-1968), which carry a penalty of five years imprisonment.
The three other suspects are Gad Finkelstein, Rami Scheinman and Oded Neumark. Neumark is CEO of Ronopolidan Ltd., a plastic packaging manufacturer, which he jointly owns with Naftali. Eden Springs is one of the company’s customers. Naftali, Neumark and Scheinman are also members of Israel’s national Bridge team. Finkelstein’s wife, Eti, was Eden Spring’s advertising director at the time of the Danone deal, and is also a suspect in the affair.
When Eden Springs and Danone announced their cooperation agreement, the Tel Aviv Stock Exchange (TASE) suspended trading in Eden Spring’s share. When trading resumed, the share rose over 50%.
The Finkelsteins, Neuman and Scheinman are suspected of buying Eden Springs shares on the basis of insider information, and selling the shares after the surge in the share price. Neuman made a profit of about NIS 1 million, and Scheinman NIS 170,000.
The Tel Aviv Magistrates Court released the five suspects on bail.
Published by Globes [online], Israel business news - www.globes.co.il - on May 24, 2006
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