Risk & Compliance

Ex-Sodastream CEO Suspected of Insider Trading

Daniel Birnbaum, now Sodastream's chairman, allegedly tipped off an associate in advance of the Israeli company's takeover by PepsiCo.
Matthew HellerSeptember 24, 2019
Ex-Sodastream CEO Suspected of Insider Trading

Israeli authorities are investigating whether the chairman of Sodastream violated insider trading laws by tipping off an associate in advance of the $3.2 billion takeover of the Israeli carbonated drink maker by PepsiCo.

Hebrew-language media reported that Daniel Birnbaum, who stepped down as Sodastream’s CEO in July, was detained for questioning on Monday by the Israel Securities Authority on suspicion of insider trading and released after posting a 1.2 million shekel ($343,240) guarantee.

According to the Times of Israel, Birnbaum “is suspected of providing significant inside information to a former SodaStream employee and a longtime associate” on three different occasions, enabling the associate to make a total of 156,000 shekels ($44,000) in illicit profits.

In two of the incidents — in February 2017 and August 2018 — he allegedly provided the associate with Sodastream financial reports before their publication.

“The third incident occurred later in August 2018, when he was said to have disclosed details of the PepsiCo mega-deal before it was publicized and sent SodaStream’s shares soaring,” the Times said.

The associate, who is suspected of insider trading and obstruction of justice, allegedly purchased SodaStream shares worth hundreds of thousands of shekels on the basis of Birnbaum’s tips.

Birnbaum is a high-profile figure in Israel, having joined Sodastream in 2007 and helped to position the company, according to the Times, as “a brash David providing a healthier alternative to the drinks offered by its Goliath competitors, which use massive amounts of sugar and sell their products in planet-killing plastic bottles.”

Deputy CEO Eyal Shohat replaced Birnbaum as chief executive on Aug. 1.

“Following 12 amazing years with you all, and upon completion of the first year integration with PepsiCo, I’ve decided to step back from the day-to-day operations at Sodastream,” Birnbaum told employees in announcing his resignation.

Sodastream employs Jews, Palestinians and Bedouins at its factory in the Negev desert, about 10 miles from the conflict-scarred Gaza Strip. “We proved that peace is possible between Israelis and Palestinians,” Birnbaum said in July.