The State Attorney's Office has summoned Ido Fishman, owner, chairman, and CEO of Gal Media Trade, which operated under the commercial name iTrader, for a pre-indictment hearing. Gal Media Trade was a platform for binary options trading.
The State Attorney's Office taxation and economic section said that the suspicions against the company and its owner concerned aggravated fraud and providing investment advice without a license. The State Attorney's Office announcement also indicates that a similar notice was given to the company's customer relations managers and a number of salespeople.
To a large extent, the decision to file an indictment, subject to a hearing, sets a precedent: it is the first case in Israel of suspicions involving fraud in the marketing of binary options. No indictments have ever been filed before in Israel for binary options trading.
According to the State Attorney's Office, iTrader offered its customers a binary options trading platform in 2013-2016. During this period, thousands of customers conducted transactions on iTrader totaling hundreds of millions of shekels. According to the statement of suspicion sent to the suspects, company representatives exerted unfair pressure on customers and took advantage of their lack of experience and understanding of binary options trading.
The statement of allegations accuses the suspects of using aggressive and fraudulent sales techniques, misleading practices, and concealing important information from customers. For example, according to the statement, company representatives made false presentations to customers about the risks and opportunities involved in binary options trading, lied about their experience and success in trading and managing customer portfolios, and exerted pressure on customers to use trading techniques that required investment of large resources, thereby causing them huge losses. Some of these methods were reported in "Globes" in 2017.
In addition, according to suspicions investigated by the intelligence, investigations and trading control division in the Israel Security Authorities, Fishman and his employees gave advice without a license, as required under the Practice of Investment Consultancy and Investment Portfolio Management Regulation Law.
The State Attorney's Office announcement further stated that the Securities Authority notified the company in June 2016 that the request for a license to operate a trading platform had been rejected for reasons of reliability, and the company's activity was discontinued.
The Ronen Rosenblum law firm, which represents Fishman and the company, stated, "We are confident that after studying and examining the evidence, we will be able to persuade the State Attorney's Office that the actions of the company and its managers were legal, and that no criminal acts were committed, as was recently ruled by the Tel Aviv District Court in a similar proceeding against the company and its manager, based on facts identical to those in the investigation."
Adv. Amit Ben Aroya of the Ben Aroya Wolf law firm, which represents a number of former employees of the company, said, "Only after a thorough perusal of the evidence will we be able to comment on the State Attorney's Office's allegations in the framework of a hearing. In any case, the employees deny that they committed any offense, and we are convinced that after their position is presented in the hearing, the State Attorney's Office will also accept this."
Presumption of innocence: The legal proceedings in the case of Ido Fishman and employees of iTrader are still ongoing. All of the suspects strongly deny the charges, and are entitled to a presumption of innocence.
Update: The hearing proceedings ended in November 2020 with the case being closed without an indictment being filed, after a conditional settlement was reached. Under the settlement, Fishman paid NIS 250,000, and Gal Media paid NIS 340,000. In addition, Fishman undertook that for a year he would not apply for a license as an investment advisor, portfolio manager, or manager of a trading platform, until November 11, 2021, after which he would be allowed to make an application. The total amount of fines paid in the affair is NIS 815,000. Under the settlement, the sales manager and the head of the customer retention department paid fines of NIS 40,000 each; the team heads paid NIS 20,000 each; and the trading coaches paid NIS 15,000 each.
Published by Globes, Israel business news - en.globes.co.il - on August 1, 2019
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