The Israel Securities Authority will ask top Bank Leumi (TASE: LUMI) executives - EVP and head of Finance and Economics Division Yaacov Haber and EVP and chief accounting office Menachem Schwartz - about the bank's profit warning published in November 2011, just four days after an offering of warrants.
Leumi Finance Company Ltd. issued the warrants on November 14, 2011. The Securities Authority investigation is defined as an administrative clarification pursuant to the Administrative Enforcement Law. Bank Leumi is liable to face a NIS 5 million fine if it is found guilty. The bank is suspected of not disclosing full information in its possession at the time of the offering of the deferred warrants. Channel 2 News broke the story.
Sources inform ''Globes'' that Bank Leumi's profit warning was published after it consulted with the Bank of Israel and Supervisor of Banks David Zaken. The bank published the profit warning immediately after it learned about the relevant material - permanent losses on foreign securities and the loss of value of it stake in Orange franchisee Partner Communications Ltd. (Nasdaq: PTNR; TASE: PTNR).
Banking sources say that Bank Leumi acted properly by publishing the warning as soon as it obtained the information, which was unrelated to the offering of deferred warrants a few days earlier.
Bank Leumi said in response, "In the past few weeks, the Securities Authority has been conducting an administrative clarification with regard to the bank's profit warning in November, and the offering of deferred warrants. The bank wishes to emphasize that this is an administrative clarification, not a criminal investigation. The bank acted properly and legally."
Bank Leumi's share price fell 0.2% by midday today to NIS 12.47, giving a market cap of NIS 18.4 billion.
Published by Globes [online], Israel business news - www.globes-online.com - on March 27, 2012
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