Joyous exclamations were heard today in the courtroom when Tel Aviv District Court Judge Khaled Kabub read his verdict in the trial of former Psagot Investment House Ltd. executives accused of bond manipulation, after the judge announced that there were acquittals in the case. The joy, however, was soon replaced by bitter disappointment for two of the main accused in the case: David Edry and Shai Ben-David.
As time passed in the courtroom, it transpired that the judge had acquitted Aharon Navon and Saar Weintraub, two former Deutsche Bank employees, who were accused of less serious offenses. He convicted Edry and Ben-David of most of the offenses of which the District Attorney had accused them.
Two weeks after sentencing Nochi Dankner to two years in prison for manipulating IDB Holdings shares, Kabub today convicted Edry and Ben-David of committing fraud in Psagot's nostro account in 2007. The conviction came nine years after the crimes were committed, while former senior Psagot executives Roy Vermus and Shay Yaron have not been tried, despite having been questioned under caution. The verdict is an important accomplishment for the Tel Aviv State District Attorney (taxation and economics), which regards the case as one of its most important cases since the economic court was established five years ago.
During the period relevant to the indictment, Edry was VP of Psagot's brokerage and manager of the company's nostro account, and Ben-David managed the firm's trading room. Navon managed a bond trading room at Deutsche Bank, in which Weintraub was a broker.
The trial centered around an indictment for fraud in corporate and government bonds committed by Edry and Ben-David in 2007 through Psagot's nostro account. Edry and Ben-David were convicted today on five counts of fraudulently influencing securities fluctuations, and on three counts of aggravated fraud. They were using Psagot's nostro account in September 2007 to lower the price of securities being offered by conducting substantial sales, while simultaneously acting to raise the price of the collected securities through substantial purchases, thereby exploiting the nostro account's economic power to improve the conversion ratio in the tender.
The indictment under which they were convicted stated, "As part of the preparations for the 2007 swap tender, Edry and Ben-David committed fraud in trading in various securities through the Deutsche Bank nostro account in order to obtain profit and benefit in two aspects: an artificial effect on the conversion ratio between the securities being issued and those being collected in the tender, and production of a substantial profit for the nostro account at the expense of the state as a result."
In the second count on which they were convicted, Edry and Ben-David were convicted of fraudulently influencing securities by making deals in order to raise the price of Series E Delek Real Estate bonds. According to this count, the two men conducted many large-scale deals in the last week of 2008 in order to raise these bond prices, following an agreement with then Delek Real Estate CEO Hillel Rosanski, who undertook to buy the bonds for the company account at higher than the market price. The bond purchase amounted to NIS 50 million.
The third count, of which only Edry was convicted, involved securities fraud and corporate breach of trust. He was convicted of conducting personal deals in short-term loans that affected their prices in a conflict of interest.
Published by Globes [online], Israel business news - www.globes-online.com - on December 22, 2016
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