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The demand by the Israel Securities Authority that Psagot-Ofek CEO Gabriella Ravid leave her job if indicted may not have a legal leg to stand on. In previous cases, in which business people were suspected of criminal activity, steps were taken against the managers only following conviction, not in the indictment stage.

Psagot-Ofek, which is owned by Bank Leumi, was sold six months ago to York Capital Management. The authority earlier this week conditioned the sale on Ravid and her deputy, Danny Zilbiger, not continuing to hold their positions. Recently, the State Prosecutor's Office decided to indict Ravid, Zilbiger and others concerning suspicions of consultancy violations at the bank.

The most important precedent in this matter involved the insurance cartel affair. The case is relevant because insurance companies, like mutual funds, manage money on behalf of others. Thus the faithfulness of the manager is particularly important. Yet, this precedent does not support ISA's decision: The insurance heads were deposed only after conviction.

In fact, even conviction didn't mean the insurance head's departure was a done deal. The insurance company boards refused then insurance commissioner Doron Shorer's demand to unseat them, and the watchdog was forced to amend insurance license criteria to force the boards to comply. The High Court of Justice supported Shorer's decision.

Shorer set the rule that a convicted person was unfit to run insurance companies or manage customer funds. Still, he limited this rule to convicts alone, and chose not to disqualify Levi Rahmani from heading Ayalon Insurance as long as the trail against him continued.

Most insurance heads were convicted in a plea bargain. Some of them, such as Rahmani, refused to sign the plea bargain; their trials continued another seven years, ending in conviction.

They remained in their positions the entire period. This point reveals the achilles heal in the ISA's current demand.

Another case liable to link dismissal with conviction involves Paz CEO Moudi Ben-Shach.

His competitors want to disqualify him from the Ashdod oil refinery tender because he has been indicted in the gas cartel affair. However, the Government Companies Authority is expected in the coming days to reject this call. If, on the other hand, Ben-Shach is convicted, he won't be able to serve on the Ashdod refinery board.