On September 27, 2017, Pomerantz LLP was appointed Lead Counsel in a class action lawsuit filed against B Communications Ltd. (“B Communications” or the “Company”) and certain of its officers. The class action, filed in United States District Court, Southern District of New York, and docketed under 17-cv-04937, is on behalf of a class consisting of investors who purchased or otherwise acquired B Communications securities, seeking to recover compensable damages caused by defendants’ violations of the Securities Exchange Act of 1934.
B Communications Ltd provides various communications services for business and private customers in Israel. The company offers fixed-line telephony, fixed-line broadband Internet infrastructure access, Internet service provider, cellular telephony, international telephony, international and domestic data transfer and network, information and communication technology, pay television, multi-channel television, television and radio broadcasts, satellite broadcasts, and customer call center services, as well as other communications infrastructures and services.
B Communications is a subsidiary of Internet Gold–Golden Lines, itself a subsidiary of Eurocom Communications Ltd. (“Eurocom”), owned by Shaul Elovitch (“Elovitch”).
At all relevant times, Bezeq The Israel Telecommunication Corporation Limited (“Bezeq”) has existed as a subsidiary of B Communications. On or around June 24, 2015, Bezeq completed a merger with its subsidiary D.B.S., Satellite Services (1998) Ltd. (“DBS”), more commonly known by its trade name “YES”, a satellite television operator (the “Bezeq-YES Merger”). Prior to the merger, Bezeq held a 49.8% stake in YES, while Eurocom held a 50.2% stake in the YES. Pursuant to the merger, Bezeq paid Eurocom NIS 680 million to acquire its holdings in YES.
Through his ownership of Eurocom, at all relevant times Elovitch has exercised control over Eurocom, B Communications, and Bezeq, and has served at all relevant times as the Chairman of the Board of Directors at each of the three companies.
The complaint alleges that throughout the Class Period, Defendants made materially false and misleading statements regarding the Company’s business, operational and compliance policies. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (i) Elovitch had engaged in illegal conduct in connection with the Bezeq-YES Merger; (ii) discovery of the foregoing conduct would subject B Communications and/or Bezeq to heightened regulatory scrutiny and potential criminal sanctions; and (iii) as a result of the foregoing, B Communications’ public statements were materially false and misleading at all relevant times.
On June 20, 2017, The Times of Israel reported that the Israel Securities Authority (“ISA”) had raided the offices of Bezeq and detained Elovitch. The ISA advised Bezeq that it was investigating “suspicions of violations of the securities law and the penal code relating to transactions connected to” Elovitch. The Israeli publication Globes reported that the ISA is investigating the Bezeq-Yes Merger, as well as payments the unit made to Eurocom under pressure from Elovitch.
Following this news, B Communications’ share price fell $1.00, or 4.65%, to close at $20.50 on June 20, 2017.