Gabi Ravid Has to Go

It is regrettable to see Gabi Ravid, the chief executive of Psagot-Ofek, and perhaps Micky Civier, the general manager of Leumi Pia, end their careers this way.

These are two of the best mutual fund managers to ever grace the Israeli capital market. These are people who steered their investors' money safely through the shoals after years, and who will be very hard to replace.

It is therefore regrettable to see the two ending their celebrated careers this way. But there are no choices.

Ravid and Civier, and other personalities in the Bank Leumi management, are suspected of breaking the law that requires investment advisers at the banks to provide objective counsel.

They are suspected of causing advise at Bank Leumi branches to be skewed in favor of the mutual funds they run. By extending contingent perks to the advisers at the branches, they are suspected of inducing these advisers to persuade bank customers to invest in these funds, which may have been in the interest of the adviser and of the Bank Leumi funds - but which was not in the customer's own best interest.

In short, they are suspected of plugging the bank's funds in contravention of the customer's own good.

You can't do wrong and just say Sorry

The suspicions have hardened to the point of the prosecution preparing charges, though a final decision will be left pending until they receive a hearing.

You cannot be suspected of having injured the clients of the mutual funds you run, let alone by breaking the law, and expect to merrily continue running the funds. No honest manager would even seek to, because he should know that a fund manager's success is based primarily on the trust investors have in him.

And if charges are filed against Ravid and Civier, that faith will crack, it must. Therefore, having Ravid and Civier stay on as managers of the funds would injure the funds they run. That is enough of a reason for them to see for themselves, that they must go.

Therefore, regrettable though it may be, Moshe Terry - the chairman of the Israel Securities Authority - is right to demand that Ravid step down from her seat at Psagot before Bank Leumi finalizes that company's sale to York Capital Management.

There is a price to the crimes of which they are suspected, even at the stage of charges. It is a cost in terms of their good name, and the price of bearing responsibility. It is the price of delivering a message to the public, that the client's interest is fundamental, and may not be toyed with: and that anybody seeking to injure that interest shall pay a heavy personal price.