The Israel Securities Authority suffered public ridicule last week when it was revealed that a celebrity basketball coach it recruited to star in a publicity campaign warning the public against fraudulent investments had been the owner of a binary options company.
On January 15, the Israel Securities Authority launched a series of YouTube commercials meant to warn the public against investment offers that sound too good to be true. One of these clips starred chef Omer Miller and another featured Pini Gershon, who won three European championships as a head coach for the Maccabi Tel Aviv basketball team.
“When it comes to your money,” Gershon says in the commercial, standing on a basketball court, “make sure you play it smart. Are you being offered guaranteed, fast returns that are very high? Are they playing an aggressive, high-pressure game, telling you you can make a lot of money quickly? Take a time out.”
While Gershon is a celebrity who is admired for his achievements as a coach, few Israelis are aware that he was at one point a major shareholder in the binary options company EZTD Inc., which ran the EZTrader.com and GlobalOption.com websites and was accused by the US Securities and Exchange Commission in 2016 of illegally soliciting and misleading more than 4,000 US-based customers and causing virtually all of them to lose their money. EZTrader was forced to pay $1.7 million in fines and compensation for victims.
Gershon was also a shareholder in B Option, a binary options website that targeted Israelis. The EZTrader website is still operational, although the company has suffered numerous setbacks and restructurings in the past year. In its heyday, EZTrader sponsored several European football teams.
Soon after the ISA campaign was launched, investigative journalist Dotan Malach from the Makor Rishon newspaper asked the ISA why it had chosen a former binary options company owner as the spokesperson for its campaign. The ISA quickly removed the video from YouTube.
“To hear Gershon saying ‘are you being offered guaranteed, fast returns that are very high? Are they playing an aggressive, high-pressure game, telling you you can make a lot of money quickly?’ is a sad joke and a very poor choice on the part of the Israel Securities Authority, which finally decided to caution the public but chose as their spokesperson someone who did precisely the thing he is now warning against,” wrote Malach in Makor Rishon on January 23. Malach was one of the first journalists to expose Israel’s binary options industry, in a February 2016 Hebrew-language investigative report.
In reply to Malach, the Israel Securities Authority wrote, “The Israel Securities Authority is working to increase awareness among the public concerning unregulated investment vehicles and to caution against the inherent risks. In order to reach as broad an audience as possible, we were helped by basketball coach Pini Gershon and chef Omer Miller so they could explain the challenges of investing to the public through metaphors of sports and food. In addition to being Maccabi Tel Aviv’s former coach who led the team to championships, he was personally the victim of a scam and in this way he added an unspoken message to the video regarding unregulated investments.”
The ISA was referring to a highly publicized 2013 real-estate investment scam in which a court determined that Gershon and others had been defrauded to the tune of NIS 3 million ($885,000).
Binary options is a fraudulent industry that flourished in Israel for over 10 years and employed thousands of Israelis. Only a handful of binary options operatives have been arrested and not a single one has been indicted, despite the fact that the industry was estimated by foreign law enforcement bodies to bring in $5 billion to $10 billion a year.
On October 23, as a result of pressure from foreign governments as well as The Times of Israel’s reporting on the issue, the Knesset unanimously voted to ban the entire Israeli binary options industry. The law went into effect January 26.
Many Israeli binary options companies have now moved their call centers abroad, while some continue to operate call centers and online trading platforms from within Israel, offering forex, CFDs, cryptocurrencies or other financial products in lieu of binary options. Earlier this month, an FBI team arrived in Israel, visiting the offices of SpotOption, a binary options platform provider, and questioning other suspects.
In a November 2017 interview, then-ISA chairman Shmuel Hauser told The Times of Israel that the ISA does not have the authority to help victims of binary options fraud get their money back.
“We don’t have civil authority like the Securities and Exchange Commission in the United States. Even with other types of securities fraud we’ve prosecuted, when the perpetrator goes to jail, the money does not go back to the victim. A victim who wants his money back has to file a class action lawsuit.”
At the time, Sharona Mazlian-Levy, the ISA spokeswoman, told The Times of Israel that the ISA’s soon-to-be-launched investor education campaign was one of the ways the Israeli regulator planned to help the public avoid being taken for a ride in the future.
Nimrod Asif, a lawyer for binary options and forex victims who has long been critical of the ISA’s inaction on binary options fraud, said the ISA “should talk less and do more. The new law grants the ISA vast investigative and enforcement powers and it should use them. The ISA has now, and has had all along, the authority to act against the forex and binary options industries. It’s absurd that the most important enforcement action against this industry – in Israel – has been taken not but the Israeli authorities but by the FBI.”
The video starring Pini Gershon can be seen here.
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