Dankner suspected of securities fraud

Authorities investigate IDB chairman of securities fraud, other offenses; IDB shares nosedive following announcement.

Nochi Dankner 311 (photo credit: Courtesy)
Nochi Dankner 311
(photo credit: Courtesy)
IDB Holding Corp. chairman and controlling shareholder Nochi Dankner is under investigation over suspected securities fraud and other offenses, the company reported to the Tel Aviv Stock Exchange Tuesday.
According to the statement, the Israel Securities Authority questioned Dankner on Monday in relation to IDB’s issue of shares and warrants on February 23. The ISA released him on condition that he remain in the country, refrain from contacting anyone involved in the case, and deposit a NIS 5 million guarantee.
“I respect the investigation process, and I have full confidence in the authority,” Dankner said. “I am convinced that my actions on this matter will be quickly cleared up. They were and have always been lawful and conducted honestly and impeccably.”
Shares in IDB Holding nosedived immediately after the 10:47 a.m. announcement, falling 5.12 percent to NIS 15.20 at close of trading.
The ISA questioned two other people on Tuesday: a Dankner associate, whose name cannot be disclosed, and securities trader Yehuda Sheleg.
In its court request to have the three men released with restrictions, the authority said that its investigation related to their suspected involvement in securities fraud, reporting violations, aggravated fraud, breach of trust and money laundering.
It alleged that Sheleg, Dankner’s associate and other parties had made fraudulent transactions worth tens of millions of shekels on February 21-23, with the aim of influencing IDB’s share price and improving the issue’s chance of success.
Dankner “financed the fraudulent plan personally by recruiting outside parties who, at his instructions, purchased shares which had been bought by Sheleg and another associate during the fraudulent activity in order to continue its financing,” the ISA stated.
“The investigation found that Dankner initiated the fraud described above, was one of its main beneficiaries, and even took care to finance a substantial part of it,” it continued. “Moreover, the investigation found that, shortly after the offering was closed, Dankner transferred NIS 8 million to the associate’s bank account.”
Explaining the need to impose conditions on the trio’s release, the authority said it would need more time to question them and other individuals suspected of involvement. It added that given the “gravity of the offenses,” there was serious concern that the suspects would disrupt proceedings by coordinating their stories, pressuring potential witnesses and destroying evidence.
“In addition,” it concluded, “given the gravity of the suspected violations and the magnitude of the aforementioned activities, there exists a real fear that [one or more suspects] will attempt to escape justice.”