ISA officials raid Leumi offices in Nes Tziona
Israel Securities Authority investigators Monday raided the offices of Bank Leumi in Nes Tziona. The raid is believed to be part of an ongoing investigation into mutual fund advice.
In recent weeks, ISA has conducted a series of raids at units of the Bank Leumi group. These have included the headquarters of Leumi-controlled mutual fund management companies Psagot and Pia, which have NIS 30 billion in assets under management. The watchdog has also interrogated dozens of consultants from Leumi branches.
ISA suspects that Leumi officials at the branches urged customers to purchase Psagot and Pia mutual funds. The law stipulates advisors must recommend the fund best suited to the client, not most profitable for the bank.
However, it appears there has recently been a development in the case. Until now, the authority was investigating violations of the Consultancy Law, which is not a criminal offense; the authority now suspects, however, that Leumi's mutual fund companies gave advisors who sold the funds perks and financed vacations. This violation of the Mutual Fund Law would constitute a criminal offense.
The ISA spokesman declined to comment for this report. Bank Leumi also refused to comment on the investigation, but said it knew nothing of any visits to any branches and that investigators had only visited the Rehovot regional office."
All divisions of the bank act according to the law and uphold regulations," a bank spokeswoman stated.