Israel Securities Authority Cites Investment House More for Overreach in Orion Board Election

Israel's Capital Markets Authority has found that the investment house More engaged in institutional activism that exceeded reasonable bounds during its involvement in the director selection process for Orion, a company spun off from GCity. The authority identified significant deficiencies in More's corporate governance and decision-making regarding the promotion of candidates for Orion's board and the exercise of voting rights tied to its management of unit holders' assets.

The authority concluded that More utilized funds from unit holders to influence the election at Orion. More, which holds 18% of Orion's shares, along with Habetah Living (7%), had proposed four directors: Habetah Living CEOs Yossi Zaitouni and Yishai Sasson, and Habetah Living owners Ariel Perlman and Yoav Carmi. In contrast, Norstar, holding 24.4% of Orion's shares alongside Katzman, sought to appoint its chairman Eran Yaakov, GCity CEO Karen Khalifa, and Sami Babkov.

The authority's review revealed that More voted for three of Habetah's nominees (Zaitouni, Sasson, and Carmi) while voting against Perlman. More also voted against Khalifa and Yaakov, but in favor of Babkov. Ultimately, the four candidates proposed by More and Habetah did not secure the necessary majority. Notably, the advisory body for More had recommended opposing all four candidates.

Criticism from the authority highlighted that More failed to bring this initiative before its investment committee for review and decision, lacked regulation within its voting policy, and did not update its publicly stated policy. The authority, led by Amit Gal, stated that "the extent of influence More sought to achieve at Orion significantly exceeds the boundaries of reasonable involvement for an institutional investor acting as a shareholder by virtue of holding assets held for unit holders."

Phoenix Underwriting, managed by Eyal Greenbaum and Udi Tobin, which holds 20% of Orion, was also involved in discussions. According to More, Phoenix Underwriting acted as an investment banker and intermediary, providing More with a presentation detailing an Habetah-developed strategic plan. Habetah had reportedly engaged with other institutional investors to gain approval for this plan. The authority emphasized that More's actions were not brought before its investment committee, despite the committee's legal responsibility for the use of control instruments funded by unit holders. More argued that the rules for appointing directors via control instruments did not apply, but the authority rejected this, citing More's initiative in identifying, promoting, and selecting board candidates.

The authority views these findings seriously and may impose financial sanctions on More. More Investment House did not provide a response.