Unusual Trading Volume Tipped Off Authorities in Dankner Probe

Dankner allegedly made purchases totaling tens of millions of shekels in the days before the share and options issue in February 2012 with the goal of manipulating the share price.

The Israel Securities Authority became suspicious that someone was manipulating IDB Holding Corporation’s share price due to a massive spike in trade volume in the days preceding a share placement last year.

The ISA is investigating IDB group controlling shareholder Nochi Dankner and believes that he and two associates had a hand in the alleged manipulation. On Tuesday ISA chairman Shmuel Hauser passed the case along to the State Prosecutor’s Office, which will decide whether to file an indictment.

The ISA’s suspicions were piqued by the massive jump in trading volume of the company’s shares in the six days surrounding a share and options issue in February 2012.

The average daily volume of trade in IDB Holding stock from January through April 2012 was NIS 1.5 million.

In the two days before the company held a stock and options issue that raised NIS 321 million, the daily trading volume shot up to 3,381% above the daily average.

Two days before the issue, volume was NIS 32 million; the day before, it was NIS 46 million. Turnover continued to be high in the few days that followed the issue; by mid-March it was back down to its daily average of NIS 1.5 million.

The ISA suspects that Dankner had associates ISP Financial Trading co-owner Itai Strum and Adi Sheleg trade IDB Holding stock in a way that illicitly boosted its price.

According to these suspicions, Dankner allegedly found funding for ISP and others to carry out the transactions. These other players allegedly bought IDB shares from ISP, giving ISP more funds in order to continue manipulating the share price.

These purchases, made with the goal of manipulating the share price, totaled tens of millions of shekels. The ISA says this is a complicated case with significant evidentiary material.

During the course of the investigation, the ISA’s investigations and intelligence department carried out a significant number of searches and interviewed many people who allegedly had a role in the affair, including senior capital market players and people with senior jobs at publicly held companies. The main suspects, Dankner, Strum and Sheleg, were released with restrictions after posting bail totaling millions of shekels.  

Moti Milrod