Israel cracks down: iTrader raided by ISA

Israel cracks down: iTrader raided by ISA, Chairman Shmuel Hauser commences procedure for banishing all binary options operations

Israel’s financial regulator has begun the signing in of legislation to ban all binary options firms and their service providers with any base or any operations in Israel from soliciting to any customers worldwide, and has also conducted a raid on the offices of retail FX firm iTrader

The State of Israel’s sudden clampdown on nefarious activity that has eminated from within the retail FX and binary options sector based on sovereign territory but targeting retail customers overseas, often with malintent, has now reached a new level.

THis week, Professor Shmuel Hauser, Chairman of the Israel Securities Authority, began to act on his promise to invoke a law that would banish any binary options activity in Israel that markets to customers overseas or provides services to offshore brands (often also owned by Israelis) that solicit overseas customers for binary options.

Professor Hauser has now stated that he has begun work on implementing the new laws, which were his brainchild and for which he asked permission from Israel’s Attorney General Avichai Mandelblit last month to be given the power to prevent all binary options activity, whether service providers, marketing facilities or other such layered companies which disguise their real ownership in order to avoid being closed down by the authorities.

In beginning to establish the new laws, Professor Hauser has now stated that he has an entire enforcement arsenal on board to shut down the entire binary options industry that has been fleecing people from all over the world to the tune of billions.

Professor Hauser this week told David Horovitz, who is the Chief Editor of the Times of Israel, that he had begun consultations on the setting in place of legislation which will bar all Israel-based binary options firms from targeting anyone, anywhere in the world.

“I am deeply troubled” by the fraudulent industry, Hauser said. The aim of the new legislation is “to put an end to the whole story” of binary options operations in and from Israel.

Furthermore, said Hauser, the police and judicial authorities have been made aware of the scale of the problem, so that the entire “arsenal” of enforcement can be wielded against the fraudsters. “All branches of enforcement are aware, and they all understand the problem,” he said. “The urgency of it is clear.”

Hauser said the wording of the legislation was straightforward but nonetheless represented “a dramatic change” and had to be structured precisely so as to apply specifically to binary options.

“What I am initiating now is legislation that will give us the means to regulate those [companies] that are based in Israel even if they are offering [binary options] to non-Israelis. They too will be covered by the legislation.” This legislation will mean that “Israelis and people overseas” are protected from the scammers.

Previously, in the advent of the commencement of such legislation, Professor Hauser had expressed his disgust at the fraudulent industry that is bringing shame and discredit over the entire country’s business environment.

He quoted the Talmudic (Hebrew rabbinical learnings and prophecies) verse, “The destroyers and layers of waste that go forth from among you (Isaiah 49:17)”, referring to the binary options fraudsters as an enemy within who bring ruin and discredit upon the very society that raised them.

Ah, I hear you say. But what if these binary options firms get wind of such an imminent law, and decide to run away to Panama or the Cayman Islands, and then carry on from there?

The interesting thing here is that – before any of these urchins and scalliwags decide that it is a good idea to up sticks and move away from Israel, it is worth considering that there is a very commonly used and very effective law in Israel called צו עיכוב יציאה מהארץ (transliteration from Hebrew: Tzav Ichuv Yitziah Mi HaAretz) which is a central point of not only Israeli criminal law, but also civil law. This means that if this practice is outlawed and any criminal trials take place, NONE of the owners of any of these firms, or their directors, will be allowed to leave the country at all, thus they will be made to face the music. If a civil or regulatory lawsuit is brought against them, they also will not be allowed to leave the country.

Considering the government’s disdain for these firms and the pressure from regulators and governments around the world that have banned it and cited several million having been taken from customers, this is exactly what would be invoked. To give an idea of how often used and how strict this law is, if you are Israeli, and you do not pay a bill such as council tax or healthcare, you would not be allowed to leave the country until the debt was settled. If you scam someone for a small amount, and that person complains to a court, you cannot leave the country until it is resolved, and this also usually includes leins on bank accounts and seizure of assets which is done by a central computer very quickly.

Add to this the new dynamic that Prime Minister Benjamin Netanyahu is right behind the directive to quash binary options, this signals a very definitive move indeed.

Today, a further draconian example of enforcement has occurred, this time however, against a retail FX firm.

The Israel Securities Authority over which Professor Hauser presides has actually conducted a raid on the office of iTrader in Ramat Gan, Israel.

Investigators from the ISA, according to Israeli news source The Marker, entered the offices of the company yesterday Authority investigators raided yesterday (Tuesday) on FX iTrader company office in Ramat Gan, with its owners, including CEO Ido Fishman, having been taken in for questioning.

iTrader is one of several companies who had applied for a license to operate a retail FX brokerage in Israel under the new laws from the ISA, however they were not granted such a license.

The State of Israel requested that the firm ends its activities by July 14 this year, and that after that date, existing customers can only close customer accounts or and close their open positions. The ISA stressed that if the company continued to operate, it would be in breach of the law.

Mr. Fishman, according to the report, denied that the ISA made a request for them to cease their activities. “No authority asked us to shut down operations. Never happened such a request” he explained to national Israeli newspaper Haaretz.

The Marker magazine published an article earlier this year relating to how iTrader uses aggressive marketing tactics to onboard new customers, in some cases promising a 90% yield, and conducted a telephone investigation posing as a customer, subsequently publishing a transcript (in Hebrew) of the overly sales-led conversation that the company’s representative had with the reporter, using tactics to make him deposit funds.

FinanceFeeds had conducted an exercise with regard to iTrader some months ago, in which a representative of the firm went for interview for a job as a sales person. At the interview, the company’s sales manager insisted that the interviewee adopted an aggressive, overly persuasive sales style, and explained that sales staff must be forceful and ensure that the customer deposits funds. When the sales pitch was completed during the interview, the sales manager said “You are making me fall asleep.”

Certainly the boiler room approach is a thing of the past, and the State of Israel will not tolerate firms that do not operate according to the law, as well as is doing its part to stop those working abroad because they do not meet the criteria in Israel from running their business in a nefarious manner also.

Photograph: The Knesset, Jerusalem Israel (Israeli parliament)

#binary options, #forex, #israel, #iTrader, #Shmuel Hauser

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