Psagot execs handed jail for bond manipulation

Shay Ben-David and David Edri Photo: Tamar Matsafi
Shay Ben-David and David Edri Photo: Tamar Matsafi

David Edry was sentenced to 54 months in prison and fined NIS 4.5 million. Shai Ben-David got 30 months.

Unprecedented severe sentences were handed down for those convicted in the Psagot Investment House Ltd. bond manipulation case. Tel Aviv District Court Judge Khaled Kabub sentenced former Psagot brokerage head and nostro account manager David Edry and former Psagot trading room manager Shai Ben-David to prison terms of 54 months and 30 months, respectively. The offenses for which they were convicted were committed in Psagot's nostro account in 2007. Edry and Ben-David will also pay fines of NIS 4.5 million and NIS 1.75 million, respectively.

In his judgment, Kabub stated that the bond manipulation affair at Psagot was worse than the share manipulation case at Manofim Finance, in which Jacky Ben-Zaken was sentenced a 26-month jail term. He added, "Edry and Ben-David's offenses damaged all investors in the capital market, the efficiency of the capital market, the efficiency of trading, and the basic values of the capital market."

According to Kabub, the accused's deeds were grave and severe. "Edry and Ben-David were acting in the course of their duties at one of Israel's largest investment houses, which manages billions of shekels in public funds. They callously exploited their power, while misusing the power of the investment house. The fraud was committed by one of Israel's largest institutions, which is expected to comply with the law."

The judge noted that Edry and Ben-David's offenses had distorted the market price in advance of a swap tender conducted by the Ministry of Finance, thereby causing serious damage. He commented, "Edry and Ben-David were motived by greed throughout the entire affair in order to boost the investment house's profits, so that their shares of those profits would be larger. Edry received NIS 65 million in salary and premiums, including a NIS 22 million premium in 2007. Ben-David was paid NIS 20 million."

"Damage to the national economy"

The conviction of Edry and Ben-David comes nine years after the events occurred. Former Psagot executives Roy Vermus and Shay Yaron were not put on trial, although they were questioned under caution at the time.

The conviction was an important achievement for the State Attorney's Office (Taxation and Economics) which regards the case as one of the most important that it has conducted since the economic court in Tel Aviv was founded five years ago.

Kabub acquitted two more junior defendants in the case: Deutsche Bank trading room manager Aharon Navon and Deutsche Bank bond trading room broker Saar Weintraub.

During the trial, prosecutor Adv. Yehudit Tirosh said that the most prominent aspect of Edry and Ben-David's conviction was that that their offenses were not a one-time action; they had been repeated numerous times, including damage to a financial instrument of Israel and the Ministry of Finance, and therefore the national economy.

During the sentencing part of the trial, Tirosh said, "When the defrauded party is the Ministry of Finance, the sovereign, the damage differs from that caused to just another investor. The most severe damage is to public confidence in the Ministry of Finance. The public wonders if Israeli s a properly run country or a banana republic, and whether or not the Ministry of Finance can be trusted."

Published by Globes [online], Israel Business News - www.globes-online.com - on April 27, 2017

© Copyright of Globes Publisher Itonut (1983) Ltd. 2017

Shay Ben-David and David Edri Photo: Tamar Matsafi
Shay Ben-David and David Edri Photo: Tamar Matsafi
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