The case against tycoon Nochi Dankner for allegedly manipulating share prices is now with the State Prosecutor’s Office, which will decide whether to file an indictment, Israel Securities Authority chairman Shmuel Hauser said on Tuesday.
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Hauser said the ISA had completed its investigation of Dankner, the beleaguered boss of the IDB group, and of securities traders Itay Strum and Adi Sheleg, and had transferred the file to the Tel Aviv district of the State Prosecutor’s Office. All three are suspected of manipulating shares of Dankner’s IDB Holding Corporation.
At this stage, however, it is unclear whether the ISA recommended indicting Dankner and his fellow suspects in the case. By law, once the head of the ISA decides to formally open an investigation, the authority must hand the case over to the State Prosecutor’s Office after concluding its work whether or not it recommends an indictment.
“By law, we cannot say what recommendation we made when transferring the file to prosecutors,” the ISA said in a statement.
Hauser said ISA investigators had acted “diligently, impartially and objectively” throughout the investigation. The investigation is one of a series of problems Dankner faces as he seeks to retain control of the heavily indebted IDB group, whose holdings include the Super-Sol supermarket chain and the mobile phone company Cellcom Israel. Bondholders have been trying to wrest control of the IDB group by forcing him to swap debt for his shares.
The ISA investigation focused on a February 2012 share offering by IDB Holding, which sits at the apex of the IDB group. Dankner allegedly enlisted Strum, who co-owns the ISP Financial Services company together with Sheleg, to fraudulently influence the price of IDB Holding shares to ensure the success of the offering.
Dankner allegedly generated the financing for ISP to carry out the plan, both by providing funds himself and by directing associates to do so during the trading days when the fraudulent activity is said to have occurred. ISP is suspected of having pumped tens of millions of shekels into IDB Holding’s shares during the offering period.
The public investigation was originally ordered by Hauser last November, following an undercover investigation by the ISA’s Investigations, Intelligence and Market Surveillance Department.
Dankner responded to Hauser’s announcement on Tuesday by denying all the allegations and expressing his hope that the case against him would be closed without charges.
“I would like to make clear that I did not initiate any fraudulent behavior,” Dankner said. “I did not commit, nor did I enlist anyone to commit, fraudulent acts. Neither did I fund any fraudulent plan.”
“I hope that after the evidence in the file is examined, a decision will be made to close the case,” he added.
Strum’s attorney, Iris Niv-Sabag, also denied the allegations against her client. “We are convinced that Itay Strum acted in accordance with the law and committed no crime,” she said.
The main suspects, Dankner, Strum and Sheleg, were released after posting millions of shekels in bail, but restrictions were placed on their movements.