Nochi Dankner, who formerly controlled the IDB group and was one of the most powerful men in the Israel economy, and financier Itay Strum were found guilty today in the IDB Holding share pegging affair. Judge Khaled Kabub said at the start of his summing up in the Tel Aviv District Court that "the evidence leaves no doubt about a conviction."
The charge was 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, paying Strum NIS 8 million.
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 became a state's witness in the case.
The Israel Securities Authority (ISA) found 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 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.
Dankner denied all the charges against him. He acknowledged the ties of friendship between him and Strum, but claimed that he did not instruct Strum to commit fraud in trading in IDB securities, and that he believed Strum's actions to have been lawful and legitimate.
The maximum penalty under law for the offenses of which Dankner and Strum have been convicetd is five years in prison. It is expected that the prosecution will ask for sentences of one to three years in this case.
Published by Globes [online], Israel business news - www.globes-online.com - on July 4, 2016
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