The Israel Securities Authority has fined Africa-Israel Investments Ltd.(TASE:AFIL) NIS 5 million, its CEO, Avraham Novogrocki, was fined NIS 400, 000($111 K), the CEO of subsidiary Africa-Israel Industries Ltd. (TASE: AFID), Avi Motola, was fined NIS 150, 000 ($41.6K) , and the CEO of its ceramics subsidiary Negev Ltd. Alon Harpaz NIS 75, 000 ($20.8 K). The Securities Authority’s Administrative Enforcement Department found Africa-Israel and the executives guilty of the use of insider information, violations of reporting rules, and misleading the Securities Authority. This is the first time that administrative sanctions have been levied against executives at public companies.
In August 2012, the Securities Authority opened an administrative investigation into Africa-Israel and its executives on suspicion of failing to report and concealing material information from investors with regard to the offer to purchase Negev Ltd. by its parent company, Africa-Israel Industries.
In January 2012, Africa-Israel Industries published a full offer to purchase 1.31 million shares of Negev (10% of the company) at NIS 23 per share, a 5.9% premium on the share price at the time, to acquire full control of the company and delist it from the TASE. The offer succeeded. The Securities Authority suspected that Africa-Israel and Africa-Israel Industries executives concealed material information about prior transactions in Negev’s share from its shareholders during the offer to purchase. It examined whether these transactions were liable to have a major effect on Negev’s share price, and that this information was concealed in order to avoid paying hundreds of millions of shekels more for Negev’s shares.