The Israel Securities Authority (ISA) recommends indicting Nochi Dankner, Itay Strum, and Adi Sheleg over the alleged share pegging affair at IDB.
On July 23, the ISA passed the file to the State Attorney's Office after completing its investigation. The ISA also requested to be allowed to publish the main findings.
The overt investigation into the case began last November, at the end of a long covert investigation by the ISA investigations, intelligence and trading control department, when Dankner was detained for questioning on the suspicion that, together with Strum, he acted fraudulently to influence the share price of IDB Holding Corp. Ltd. (TASE:IDBH), with the aim of improving the prospects of a securities offering that the company was making.
The investigation involved suspicion of securities fraud, reporting offenses, fraudulent receiving, fraud and breach of trust in a corporation, money laundering, and obstruction of justice and subversion of an investigation.
"After examination of the findings of the investigation, the State Attorney's Office has permitted publication of the fact that the Securities Authority is of the view that an evidential basis exists for the involvement of the suspects in offenses of securities fraud, fraud and breach of trust in a corporation, and fraudulent receiving," the ISA said today in a statement. "It should be stressed that these are the conclusions of the investigating authority only, and that the decision on the adequacy of the evidence and whether an indictment in this affair is justified is a matter for the State Attorney's Office."
A statement from Nochi Dankner's office issued in response reads, "As is customary, we await the decision of the State Attorney's Office, and believe that it will be decided that Nochi Dankner's conduct was impeccable."
The allegation is that Dankner used Itay Strum, together with Adi Sheleg, to influence the share price of IDB Holding fraudulently, in order to improve the chances of success of an offering the company made in February 2012. Strum is the founder and owner of ISP Financial Services Ltd., a company incorporated in Switzerland and headquartered in Zurich that manages assets for wealthy families and performs investment banking services for private clients, institutions and enterprises from around the world, including Israel.
As far as is known, ISP manages assets worth $200-300 million. Strum also has another private company named after him, Itay Strum Financial Services. Sheleg is a market trader who, at the time relevant to the investigation, was CEO of a securities broker. He is married to Maya Sheleg, owner of City Broker Ltd.
The allegation is that Strum and Sheleg, in concert with others, bought IDB Holding shares in the course of trading, and afterwards sold them to various people close to Dankner at prices lower than the purchase price, while at the same time continuing to buy shares on the market at higher prices. The investigation found that Dankner found the financing for ISP. It is alleged that Dankner saw to it that his various associates would buy IDB Holding shares from Strum and Sheleg, and thus "rescue" them from their stakes in the company. It is also alleged that Dankner paid the pair sums of money from his own pocket.
The investigation found that Strum and Sheleg made fraudulent deals to the tune of tens of millions of shekels in the period February 21-23 2012. On those days, the daily turnover in IDB Holding shares was about NIS 40 million, which was exceptionally high, and apparently set alarm bells ringing at the ISA.
Published by Globes [online], Israel business news - www.globes-online.com - on September 9, 2013
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