The Israel Securities Authority is considering placing conditions on closing the Psagot Investment House Ltd. deal, requiring that CEO Roy Vermus, chairman Arik Steinberg, and Psagot Securities CEO Shay Yaron leave their posts. By law, the Securities Authority has to approve the transfer of ownership of Psagot Mutual Funds Ltd. from York Capital Management LLC to Apax Partners.
The three Psagot executives were recently questioned under caution over their involvement in the securities fraud and stock running through the company's nostro portfolio. The main suspects in the case are the former nostro portfolio managers, David Ederi and Shay Ben-David.
"The case is now on the table of the Securities Authority, and it has to be discussed," said a well-informed source. Referring to Gabriella Ravid affair (the former CEO of Psagot), the source added, "There is a precedent for such a demand."
In the Ravid case, the Securities Authority argued, "Anyone who manages other people's money cannot cling to the presumption of innocence and must be without a stain."
The Securities Authority feels that it has solid evidence of involvement in the fraud by Psagot's executives. It believes that Vermus, Steinber, and Yaron "received in real time regular reports about what was going on in the account, and even approved some of the forbidden transactions."
If an indictment is issued against the Psagot executives, the investment house will probably also be named as a defendant. The Securities Authority declined to comment.
The closing of Apax's acquisition of 76% of Psagot from York at a company value of NIS 3.1 billion (the effective value after setting off shareholders' equity and debt is NIS 3.6 billion), is set for September. Sources close to York believe that the closing may be postponed by a quarter, or even more, until the situation is clarified.
Apax Israel managing director Zehavit Cohen is handling the deal on behalf of Apax, and York's representative in Israel Jeremy Blank is handling the negotiations on its behalf.
Published by Globes [online], Israel business news - www.globes-online.com - on April 14, 2010
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