Union Bank suffered a significant fine from the Securities Authority: was fined NIS 200,000

Posted on Jan 19, 2022 by Ifi Reporter

Union Bank suffered a significant fine from the Securities Authority after an investigation by the Authority revealed that the client called an investment advisor at his bank branch during October 2020 and asked to switch to the service of another investment portfolio manager and sign a power of attorney accordingly. The Authority examined the recorded telephone conversation between the client and the same investment advisor, in which it was found that the investment advisor tried to dissuade the client from switching to another portfolio management service. Union Bank fined NIS 200,000 by the Securities Authority.
The Authority explained that hearing the recording of the call shows that although he was not asked or asked about it, the investment adviser of the bank branch referred to the terms the client would receive from the portfolio manager he wanted to move to, asked why he chose him, referred to the portfolio manager's results that year. Favors, and compare against the returns made by the same client's advisory portfolio at the bank.

"Instead of addressing the client's question about the procedure," explains attorney Dr. Ilana Lipsker-Modai, director of the Securities Authority's administrative enforcement department, It is forbidden by the instruction.
The advisor violated the prohibition to dissuade a subscriber from a provision established by virtue of the Law Regulating the Practice of Investment Advising, Investment Marketing and Investment Portfolio Management. Taking advantage of this marketing position of the bank has harmed the fair competition between the various players in the market. "
In the last two years, sanctions for violating this prohibition have also been imposed on Bank Mizrahi, Bank Yahav and Bank Leumi. However, in the past, in order to move from the bank's investment consulting service to portfolio manager services, the client was required to go to the bank branch where his account is managed, and sign a power of attorney for the portfolio manager.
Then also the stabilization was used to sign the power of attorney by the banks to persuade customers to move to a portfolio management company related to the bank, or not to eventually get the services of the portfolio manager.
"This use of power was made possible due to the nature of the relationship between the customer and the bank," adds Lipsker-Modi, which are long-standing acquaintances, the bank has extensive knowledge of the customer and his desires, and sometimes the customer's dependence on the bank. And objectives that are subject to the duties of trust and prudence. "
The Securities Authority is leading the open banking reform, and Anat Guetta, chairman of the Authority, expresses determination in its implementation, with the authority being the one to grant the licenses to the financial entities that will compete with the banks.
The fine on Union Bank was imposed as part of the imposition of fines of about NIS 508,000 on the number of violations, including the ban on offering securities without a prospectus. The companies Rilko Real Estate Investments and Strawberry Fields Reit were fined NIS 90,000 and NIS 125,000, respectively, for this violation.
In addition, the Authority fined Mobile Max Technologies NIS 45,000 for delay in submitting a periodic report, Ability Inc. NIS 24.9 thousand for delay in submitting a periodic report, and Zion Sapir, chairman of the group. Aerodrome NIS 14,160 for 3 violations of the sale of blocked shares and a delay in reporting changes in its holdings, and Invo Delran LP for NIS 9,450 for a delay in submitting a periodic report.


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