Israel's Capital Markets Authority Moves to Revoke Insurance Agent's License

Israel's Capital Markets Authority is considering revoking the insurance agent license of Shlomo Isaac, the former president of the Association of Insurance Agents in Israel. The authority informed Isaac on Sunday that he is invited to a hearing before Supervisor of the Capital Markets Amit Gal, prior to a decision on the license revocation.

The move follows an indictment filed against Isaac in February concerning the collapse of Younet Credit, an external credit company where he served as a controlling shareholder and director. The company collapsed in 2022 amid allegations of fraud and financial irregularities.

Gal believes the severity, financial scope, systematic nature, and alleged breach of trust and fairness in the accusations against Isaac raise serious doubts about his reliability, integrity, and suitability to continue holding an insurance agent license. This is due to the high standards of reliability, integrity, and transparency expected from licensed individuals in a regulated financial market, especially those entrusted with the interests of policyholders and clients.

While the alleged offenses were not committed in his capacity as president of the Association of Insurance Agents, they occurred during his tenure. The authority noted that his public and professional standing adds weight to concerns about potential damage to public trust in the industry.

The Younet Credit affair surfaced in the summer of 2022 when the Israel Securities Authority launched an investigation into the company's controlling shareholders, including Isaac, Tzachi Azar, and Shai Penso. The core of the affair involves a transaction where shares worth approximately NIS 50 million were allocated to a private company of the controlling shareholders and two additional consultants. The indictment alleges this was a scheme to allow controlling shareholders to repay their private company's bond debts using the public company's funds to buy its own shares.

Prosecutors claim the controlling shareholders misled the public company's institutions, concealed the true funding source, and fraudulently obtained shares worth tens of millions of shekels. Isaac is also accused of promoting conflicted transactions and providing misleading information to the public.

In a separate development, former Minister of Finance Moshe Kahlon, who served as chairman of Younet Credit, pleaded guilty to reporting offenses in May as part of a plea deal. He received an eight-month suspended sentence and a NIS 180,000 fine for failing to report embezzlement and financial irregularities discovered at a company branch, amounting to approximately NIS 10.6 million.

This is not the first action against Isaac by the Capital Markets Authority. In December 2023, he was fined NIS 160,000 for transferring shares in a private company holding nine insurance agencies to his daughter without prior approval. Isaac's legal representative, attorney Eran Shaham-Shavit, stated that the legal proceedings against Isaac are unrelated to his work as an insurance agent and that Isaac has never misused his license. The representative also suggested the authority's actions might stem from personal disputes between Isaac and the authority's management, related to professional disagreements during Isaac's tenure as head of the Association of Insurance Agents.