Israel's Market Regulator Warns Agents Against Misleading Savers

Israel's Capital Markets Authority has issued a stern warning to insurance agents suspected of exploiting the sale of Altshuler Shaham's provident and pension fund activities to improperly transfer savers' funds. The authority sent a sharp letter to several agents, who allegedly encouraged savers to move their money from Altshuler Shaham by providing misleading information about the sale to WeSure Group. These agents reportedly claimed the sale would negatively impact the company's performance and harm savers' money.

The authority, led by Amit Gal, has received multiple testimonies indicating that agents contacted savers immediately after the sale of Altshuler Shaham's provident fund operations was announced. The warning letter details the potential consequences of providing erroneous advice, characterizing the agents' actions as 'fear-mongering' that constitutes deception and violates their professional obligations.

While no sanctions have been imposed yet, the authority hopes this unusual step will deter agents from misusing the transaction and similar future events. The warning also extended to a large institutional entity in the pension and provident fund sector, suspected of creating a false impression among savers to divert their funds to its own operations.

The authority's action comes two and a half weeks after the $270 million deal for WeSure to acquire 55% of Altshuler Shaham's provident and pension fund activities. Reports of agents exploiting the sale for commissions, known as "volume commissions" paid for acquiring new clients or transferring savings, began surfacing shortly after the deal was announced. The authority had previously issued a reassuring statement emphasizing that the sale between two stable, regulated entities would not affect savers' funds or rights.

Altshuler Shaham's outgoing owner, Gilad Altshuler, and CEO Yair Levinstein also addressed the issue in an online webinar, urging savers to remain patient and assuring them that the investment team and management structure would remain unchanged, with Levinstein increasing his stake to 25%. Despite these assurances, Altshuler Shaham's provident and pension fund operations have been experiencing significant client departures due to weak returns, losing over $8 billion since the beginning of the year prior to the sale announcement.