In the managed account track, the defendant traded in a contract for at least 35 people , through the robotic trading that he characterized according to parameters determined at his discretion. The trading was carried out without the exercise of discretion by the clients, most of whom had no understanding of trading in financial instruments and some of whom had a very basic understanding.
The actions carried out by the defendant in the clients' accounts, as described above, are activities of managing investment portfolios that require a license under the Consulting Law, since the defendant traded for his clients in a CFD contract, which is a financial asset as defined in the Consulting Law, when the discretion with respect to the transactions was vested in him.
At the end of the indictment, it was noted that in taking the actions detailed above, the defendant offered to manage and actually managed investment portfolios without a portfolio management license and in contravention of the provisions of the Consulting Law.
- The third charge deals with a referral to a merchant arena that is not supervised in Israel, in which the defendant is charged with committing the offense of prohibiting offering to trade in an unauthorized trading arena, under section 53(b)(6b) of the Securities and Exchange Law.
In this indictment, it was noted that in May 2015, Amendment No. 42 to the Securities Law (Amendment No. 42), 5770-2010 (hereinafter: Amendment 42) came into effect, in the framework of which Chapter 73, which deals with trading arenas as defined in Section 4412 of the Securities and Exchange Law, was added to the Law.
It was noted that Amendment 42 is intended to regulate the supervision of trading exchanges and states that in order to operate them, an arena license is required from the Israel Securities Authority (hereinafter: the INA or the Authority). Alongside the license obligation, Amendment 42 prohibits making an offer to trade in a trading arena that is not supervised in Israel.