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Prisma Investment House board chair Ron Lubash announced on Tuesday that Ben Gavison and Ezra Atar, the managers of the Hermon and Tavor provident funds that lost 8.3% in one month on a reckless gamble, were being fired.

Now it turns out that this is not quite the case. Gavison and Atar put themselves at Lubash's mercy on Monday evening, the night before Lubash's press conference, and Lubash simply accepted their resignations. Gavison will no longer work for Prisma and will not touch fund members' money (at least not at Prisma), while Atar will continue to share his vast capital market experience for the fund members' benefit (but not in a management position). Lubash also said that he will announce Prisma's plans for compensating members hurt by the funds' losses within 45 days.

The 18-page report issued Tuesday by Prisma economic advisor Joseph Bahir reveals a veritable Sodom and Gomorrah of irresponsible mismanagement at Israel's largest investment house, and should be required reading for every capital market employee.

Falsified reports, disregard for instructions, faulty oversight, unsuitable computer systems, inappropriate securities, risk-taking at the members' expense and irresponsible actions by managers and external board members - this is how pension monies are managed in Israel in 2008.

Bahir found that some Prisma provident fund managers were actually day-trading, and that all the commissions from this crazy behavior went to Prisma's brokerage firm.

The report notes that the funds operated via a "splitting fund" (whereby assets are purchased for a general account and are divided among the funds at the day's end or the following morning). There was, however, one fund, similar to Hermon, that is apparently some Prisma manager's pet project, and is run differently - explaining why that fund lost only 1.2% in January.

Bahir's examination of the reports Prisma submitted to its investment committee revealed that they did not reflect reality, and that no one intended to follow the committee's instructions to hedge the shares portfolio. Just the opposite - the investment managers left the meeting and wanted to increase the exposure to shares. The report following the massive losses was also falsified.

Competition is a good thing, but everything has its limits.

A "solid" provident fund cannot have an 85% exposure to shares - and yet report that its exposure is just 24%. More's the pity that Prisma officials are accusing the banks of "not warning of irregularities" and that Lubash has found time to blame Gavison's youth (he is 31) and criticize the competition for trying to "swipe" his clients.

Neither Gavison's tender age, the banks nor the competition are to blame. The culprit is simply poor management.

Lubash argued that no managerial vacuum has been created by the resignations of CEO Dov Kotler, Gavison and Atar, but he is wrong. Prisma has a serious management problem. Many questions remain unanswered: Why does Prisma still need Atar's experience? How will members be compensated? Are the current corrective measures enough?

We can only hope that Prisma is the only fund affected by such recklessness, and that in spite of everything the right steps are being taken for the future.