October 18, 2016

Israel-based Bank Leumi will pay $1.6 million and admit wrongdoing to settle charges that it provided investment advice and induced securities transactions for U.S. customers for more than a decade without registering as an investment-advisor or broker-dealer as required under U.S. securities laws.  The SEC’s order found that Bank Leumi maintained several hundred securities accounts that were beneficially owned by U.S. customers and managed more than $500 million in securities assets for U.S. customers.  To mitigate the risk of violating U.S. laws, Bank Leumi began exiting the U.S. cross-border business in 2008.  But approximately 100 U.S. customer securities accounts remained open with the bank three years later and bank employees continued to have contact with U.S. customers.  The SEC’s order finds that Bank Leumi made about $3.37 million in profits from its U.S. cross-border business.  Bank Leumi disgorged about $3.3 million of those profits in a deferred prosecution agreement with the Department of Justice in 2014.  Bank Leumi will disgorge the remainder to the SEC in addition to paying a $1.5 million penalty.  SEC

Tagged in: Securities Fraud,