Matthew Bronfman, the controlling shareholder of Israel Discount Bank, quit his position as director of subsidiary Discount New York. The Bronfman family's representative on the board, Michael Rubinoff, also resigned.

Discount said the reason for the resignations was the decision by the bank's board in Israel earlier in the month that controlling shareholders and their representatives should not serve as directors of the bank or its subsidiaries.

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The Bronfman family led a group of investors that in 2005 bought 26 percent of the stock in the Tel Aviv company and has an option to purchase 25 percent more. However, in addition, the newspaper Crain's New York Business reported just hours after the bank's announcement that Bronfman was forced out after an investigation into whether he exploited his position for his personal benefit.

Crain's reported that the resignations were offered at last Friday's board meeting, and that Leonard Grunstein, who served as chairman of IDB NY, did not appear at the meeting, and notified the board that he would not accept the recommendation to step down. He was then removed from his position by the board.

According to Crain's, the Bronfman resignation is the result of a number of run-ins with regulators in New York. At the beginning of the year the bank had hired the services of the Sullivan and Cromwell law firm to investigate Bronfman's activities, and their report was submitted in March.

Crain's further stated that Bronfman was accused of intervening to convince a credit officer to grant a million-dollar loan to one of his ventures, as well using the bank's offices for his personal use. It was also claimed that Bronfman interfered in internal bank business.

According to Crain's, the report did not draw any conclusions about Bronfman's actions, and a spokesman for Bronfman says the bank believes the report exonerates him.

Discount New York has had a number of other troubles in recent years, including charges of allowing money-laundering, for which it paid a $12 million fine last October.

Discount New York is the 10th largest commercial bank in New York, with assets of $8.8 billion. It holds $6.9 billion in deposits.