The Tel Aviv District Attorney's Office (taxation and economics) today filed an indictment for insider trading at the Tel Aviv District Court against Aryeh Czaczkes Axselbrad, ex-husband of Compugen Ltd. (Nasdaq: CGEN; TASE: CGEN) CFO Dikla Czaczkes Axselbrad, and his sister, McCann Group Israel vice chairperson Hana Rado, who last year founded Supersonas Israel, an organization aiming to address the gender imbalance in management. The alleged insider trading involved the possibility of cooperation between Compugen and German pharmaceutical company Bayer.
According to the indictment, Aryeh Czaczkes Axselbrad disclosed insider information to Rado about a future investment in Compugen.
Compugen deals in technologies for discovering gene-based drugs and medical products. Initial contacts between Compugen and Bayer concerning cooperation between them on commercialization of molecules for development of cancer drugs began in March 2012. A limited group in Compugen was involved in the negotiation process and the decision-making on the deal.
Aryeh Czaczkes Axselbrad, an El Al Israel Airlines Ltd. (TASE: ELAL) pilot, was married at the time to Dikla Czaczkes Axselbrad, who was then responsible for Compugen's relations with investors. As a member of senior management, Dikla was constantly informed of the particulars of the negotiations when an agreement was about to be signed, and had full access to insider information, making her an insider. The indictment alleges that being married to Dikla made Aryeh an insider under the Securities Law.
At that time, Rado was COO of the McCann-Erickson Israel advertising group, and chaired its McCann Valley branch. She also fully owned a consultant company, through which she received her salary from McCann-Erickson.
Compugen signed an agreement with Bayer on August 5, 2013. According to the indictment, on the preceding day, August 4, 2013, Aryeh Czaczkes Axselbrad told Rado that he had insider information that he could not use concerning an investment in Compugen, and that it would be worthwhile for her to buy Compugen shares. He also allegedly told her to keep the information a secret.
One day after receiving the information from Aryeh, before Compugen reported the expected deal, Rado bought Compugen shares for NIS 54,000. 40 minutes after the company's immediate report was published, the Compugen share price soared 44.58% above its most recent transaction price, and 53% above the base price. The trading volume was 22.58 times the average daily volume over the preceding four months.
Rado allegedly sold the shares that she had bought two days later, making a NIS 20,000 profit on her trading in the share.
The Securities Authority Investigations, Intelligence and Market Surveillance Department investigated the case, and arrested Aryeh Czaczkes Axselbrad in April 2014. He was interrogated and released on restrictive conditions, and the case was later transferred to the Tel Aviv District Attorney's Office (taxation and economics).
Published by Globes [online], Israel business news - www.globes-online.com - on May 15, 2016
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