Nochi Dankner, head of the IDB Conglomerate, is under questioning on suspicion of securities fraud and other actions in question related to IDB's public offering on February 23, IDB reported Tuesday.
CEO of City Brokers Corporation Yehuda Sheleg was also detained on suspicion of involvement in the case.
The investigation involves suspicions of securities fraud, reporting offenses, fraudulent receipt with aggravating circumstances, fraud, and corporate breach of trust, as well as suspicions of offenses regarding the Money Laundering Law in which Dankner, Sheleg and another party– whose name currently remains undisclosed – are allegedly involved.
Dankner is suspected of providing the finances – his own and from other sources – for a scam involving the purchase of IDB stock on the day it was issued. That day, IDB Holdings' stock registered unusually high activity on the Tel-Aviv Stock Exchange.
Suspicions are that Dankner was involved in manipulating the market on the day of issue – in other words, he is suspected of being involved in a massive acquisition of IDB Holdings stock, along with Sheleg.
The stock acquisition was likely aimed at maintaining the stock's value ahead of the issue. Once the issue ended, IDB Holdings' stock began plummeting.
Dankner, chairman of IDB's board and one of the owners of its controlling interest, allegedly financed the scam with his own resources and recruited other parties who, according to his instructions, purchased stock that was bought by Sheleg and the other accomplices in order to provide the finances to keep the scam going.
According to an announcement released by TASE, the sophistication and scope of the offenses raise concerns of real likelihood of obstruction of legal proceedings by way of coordinating versions, influencing witnesses and potential accomplices, destruction of evidence, and more.
Nochi Dankner commented, "The Israel Securities Authority is looking into the matter. I respect the investigation process and have full confidence in the Authority. I am convinced that it will soon be found that all my actions - in any matter - were and are always will be lawful and in full and irreproachable honesty."
Last February, IDB held a successful securities issue in which it raised NIS 321 million ($83 million). In the institutional phase the company raised NIS 286 million ($74 million) and the public offering yielded NIS 35 million ($9 million) in requests.
The offering aimed to beef up IDB's cash reserves so the company could meet its financial obligations to its bondholders.
This report was originally published in Hebrew