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Israel Regulator Finds Signs of Fraud in Tycoon Trading Probe

The Israel Securities Authority said a trading probe found evidence of fraud in transactions involving suspects including embattled businessman Nochi Dankner.

The probe’s findings, which the regulator transmitted to the prosecutor on July 23, concern a securities issuance of Dankner’s IDB Holding Inc. (IDBH), the authority said today in an e-mailed statement. The state prosecutor will decide whether to file charges, according to the ISA statement. Danker said that prosecutors will find his behavior was faultless, according to an e-mailed statement from his office.

The announcement slaps the tycoon with another setback as he wrestles with bondholders to retain control of his debt-laden conglomerate, one of Israel’s largest. Dankner is trying to sell assets and find investors for his holding company, which has about 2 billion shekels ($552 million) of debt.

Dankner turned a family business that made its fortune in table salt and real estate into a sprawling holding company, which includes Israel’s biggest supermarket chain, Shufersal Ltd. (SAE), and the largest mobile operator, Cellcom Israel Ltd. (CEL) A combination of unprofitable investments and regulations to boost competition cut IDB’s market value to 282 million shekels from 5.06 billion shekels at the end of 2010, according to data compiled by Bloomberg.

IDB Holding shares declined 2.9 percent to 6.55 shekels at 12:41 p.m. in Tel Aviv. The yield on the company’s 1.07 billion shekels ($295 million) of 5.1 percent bonds due in December 2020 jumped 155 basis points to 54.62 percent.

To contact the reporter on this story: David Wainer in Tel Aviv at dwainer3@bloomberg.net

To contact the editor responsible for this story: Claudia Maedler at cmaedler@bloomberg.net

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