(Adds details, trade halted)
JERUSALEM, June 20 (Reuters) - The Israel Securities Authority said on Tuesday it had opened an investigation into the country's largest telecom group, Bezeq Israel Telecom and its controlling shareholder.
The market regulator said in a statement that the probe "deals with suspicions of violations of the securities law and the penal code relating to transactions connected to the controlling shareholder".
Trading in Bezeq and its parent companies was halted in Tel Aviv following the announcement.
The company said it learned of the investigation on Tuesday morning but did not know why it was being targeted. The securities authority did not elaborate.
Bezeq is controlled by its chairman, Shaul Elovitch, through holding company Eurocom Group.
Eurocom gives Elovitch control over assets like satellite operator Spacecom and Enlight Renewable Energy . He is also a close friend of Prime Minister Benjamin Netanyahu, a relationship that bars Netanyahu from dealing with all things Bezeq.
Bezeq has dominated Israel's telecom sector for decades and, with a generous dividend policy of distributing all its net profit, is a favourite among foreign investors.
Looking to shore up its position further, Bezeq is lobbying the government to end a forced separation of its fixed-line, mobile and satellite TV units.
However, opponents say that allowing Bezeq to combine its subsidiaries into a single company will stifle competition. (Reporting by Ari Rabinovitch and Steven Scheer; Editing by Tova Cohen and Alexander Smith)