Branding the binary options industry in Israel “repugnant,” “immoral” and profoundly damaging to the country, Natan Sharansky on Monday urged Israeli regulators to do everything in their power to close it down.
Sharansky, who heads the Jewish Agency, the primary organization responsible for immigration and absorption of Diaspora Jews in Israel, said the Agency is alerting all immigrants and other potential employees to steer clear of the industry, “which uses immoral methods to entice innocent victims.”
In a statement issued a day after the head of the Israel Securities Authority, Shmuel Hauser, told The Times of Israel that the global scam perpetrated by Israel-based firms is doing immense harm to Israel’s reputation and promised to tackle the fraudulent industry, Sharansky said he had been “dismayed to learn of the extensive manipulation perpetrated on unwitting, innocent people by companies marketing binary options trading services.”
Sharansky said the Jewish Agency has “consistently directed our professionals to reject job postings from binary options companies and to alert all immigrants and other potential employees against employment in this industry, which uses immoral methods to entice innocent victims.”
And he said he would be writing to the Council of Immigrant Associations in Israel, urging them to do the same.
“The damage caused to the victims, to job-seekers lured into becoming involved and tainted, and to the State of Israel is profound,” said Sharansky, a former Soviet Prisoner of Zion and ex-cabinet minister and Knesset member. “I call on the regulating authorities to do whatever they can to prevent this repugnant industry from operating within Israel’s shores.”
The Times of Israel has in recent months been detailing massive fraud by Israeli binary options firms, beginning in March with an article entitled “The Wolves of Tel Aviv.” The fraudulent firms purport to be guiding their customers in making lucrative short-term investments, but are in fact using various ruses, including misrepresentation, allegedly manipulating rigged trading platforms and outright refusal to return deposits, to steal their clients’ money.
All local binary options firms are now banned by the ISA from targeting Israelis, but they remain free to target people abroad. The US has banned overseas binary options firms from targeting its citizens, and numerous countries, including the US, Canada and France, are investigating Israel-based binary options fraud on behalf of their citizens who have been cheated. Belgium last week became the first European country to ban the industry, in a move that takes formal effect on Thursday, August 18.
Immigrants from French- and English-speaking countries are particularly prized by the fraudulent Israel-based firms, which target victims worldwide and often encourage their salespeople to use false identities, lie about their financial skills, and misrepresent where they are calling from as they seek to persuade victims to trust them with their money.
The wide-scale fraud has been snowballing over the past decade, and the ISA has thus far proved slow to react. Earlier this year, it finally banned all binary options firms from targeting Israelis, but it has said it lacks the tools and the authority to prevent Israel-based firms from fleecing victims overseas.
Hauser told The Times of Israel, however, that he is now recruiting all arms of law enforcement, will push for new legislation as needed, and has full political support to grapple with the flourishing fraudulent industry, which, The Times of Israel has reported, employs thousands of Israelis working for more than 100 companies that defraud victims all over the world of billions of dollars.
“I see this on a personal level,” Hauser said, “not just as a regulator, but as an Israeli citizen and as someone who is disgusted by fraud and especially by the type of people who take money from the unfortunate, from orphans and widows.”
Hauser stressed that while his ISA cannot “regulate the entire world,” the scale and nature of the Israel-based fraud requires an urgent and specific solution, including changes to the law if necessary.
“Any way you look at it, as a human being, as a citizen, as a regulator, as a Zionist, as a father, and as a grandfather,” Hauser said, “it looks awful to me.”
Within months, Hauser therefore promised, the authorities would “step up a notch… and take a big step” to tackle the fraudsters. He said the various Israeli enforcement bodies, including regulators and the police, have a high-level consultative forum, and that they would get together in that forum to “formulate the policy, and quickly, for how to deal with this problem, because it is a problem of national significance.” The forum, he said, would “decide on operative steps within the current law, and also on additional steps to expand our jurisdiction.”
Two weeks ago, MK Michael Oren, now a deputy minister responsible for public diplomacy, recommended an inquiry into Israel’s binary options industry, calling revelations of a massive global scam defrauding hundreds of thousands of international customers “very, very disturbing” and warning of its potential to damage Israel’s international standing.