ISA Israel: iTrader financial firm’s managers and some employees defrauded traders
Senior iTrader executives were arrested on suspicion of aggravated fraud, securities violations, and other crimes.
Managers at the iTrader trading firm and some of its employees were part of a well-oiled and organized machine for defrauding and abusing clients who did not understand investments, and followed the misrepresentations made to them by company employees with blind faith. These allegations were leveled by the Israel Securities Authority as part of its request for restrictive conditions for the release of iTrader executives and employees Ido Fishman, Daniel Swartz, Naor Noah, Jonathan Tourjman, Yitzhak Babler, Itam Durab, and Maor Jerby, who were arrested yesterday on suspicion of securities violations.
The investigation concerns suspicious activity by Gal Media Trade, which operates iTrader, a private company fully owned by Fishman, its chairman and CEO.
iTrader was previously a sponsor of the Beitar Jerusalem soccer team, and is the chief sponsor of the Maccabi Tel Aviv basketball team. Swartz, former sales manager of Gal Media Trade, is currently deputy CEO of a different company managed by Fishman. Noah was a sales manager in charge of salespeople in the company customer retention department, Tourjman was a team leader in the company, and Babler, Durab, and Jerby were trading coaches.
It is suspected that, from May 2013 to May 2016, the suspects provided investment counseling without a license, and repeatedly made false presentations to the company’s clients about investments in financial assets in order to persuade them to invest.
The investigation found that they induced their clients to invest through the company, and had persuaded clients to continue investing their money even though the clients had asked to halt their investment, after accumulating heavy losses. The suspects did not hesitate to inveigle clients into making further investments, even though the clients had suffered thousands of shekels in losses, by taking advantage of the mental distress caused by the clients’ losses on their investments.
The investigation also found that the company had given the Securities Authority misleading information as part of its request for a license for operating a trading room.
In June, the Securities Authority team decided to reject the request for a trading room operating license submitted by Gal Media Trade for reasons pertaining to the company’s soundness.
Those arrested are suspected of providing counseling, marketing investments, and managing investment portfolios without a license, as well as aggravated fraud. Fishman is also suspected of obstructing the Securities Authority’s investigation into the affair and obstruction of justice.
Yesterday, the suspects were brought before the Tel Aviv Magistrates Court for release under restrictive conditions. Representing the Securities Authority, Adv. Eran Shacham-Shavit told the court, “Those people (the trading coaches, E.L.-W.) acted as an organization for all intents and purposes, and knew that these were false representations made to the clients in order to cause them to act and hand over their money. They acted out of greed and for bonuses at the clients’ expense, concealing from them relevant particulars about their accounts, even when losses had accumulated for those clients. These employees deliberately, with the managers’ knowledge, exploited their situation (the clients’ mental distress, E.L.-W.) in order to keep the well-oiled machine generating money for the company’s unsuccessful investments, while knowing that the clients would in all probability lose their money.”
Representing the suspects, Adv. Zohar Lande asserted that the company had operated for three years. He said he would have expected the Securities Authority, whose job was to protect investors, to step in earlier, instead of alleging that a well-oiled machine had operated fraudulently for three years. “Not only did we not act clandestinely, but there was complete transparency. We asked the Securities Authority for a license to operate trading rooms,” he said.
All the suspects were released on restrictive conditions.
iTrader said, “All company employees are fully cooperating with the Securities Authority. We emphasize that the company approached the Securities Authority on its own initiative for a license to operate in Israel. When the license was not approved, the company terminated its activity.”