Tel Aviv Court Rejects Request to Approve Finbert Settlement in Slices Case

The Tel Aviv District Court has rejected a request by attorneys Eitan Erez and Mor Ben Shoshan to convene a meeting of Finbert fund members to approve a principles agreement aimed at returning part of investors' money in the Slices affair. Judge Sigal Yakobi ruled that the proposed framework "lacks legal basis" and that no legal mechanism exists to impose the settlement on dissenting members.

Last month, Erez and Ben Shoshan submitted an exceptional petition after negotiating a principles agreement with Finbert, the insurance and fund management agency. The plan offered Slices members two options: receive 51.5% of their money within 18 months or continue fund management for up to six years for a higher return, addressing different risk preferences. Additional parties, including Nefta, Ilit Motola, Gabriel Kavashvili, and 24 Finbert-distributed funds, later joined the settlement.

However, the judge emphasized that only the authorized Slices manager can propose a binding settlement under the law, and no alternative procedural framework was identified to approve a settlement binding all members. Even if a majority supported the deal, it could not be approved in the current proceeding. The ruling left open the possibility for individual or group agreements that do not infringe on others' rights or bind non-consenting parties.

Judge Yakobi encouraged the authorized manager, CPA Effi Sandrov, to review the settlement principles with the petitioners to explore incorporating them into an official settlement plan supported by all stakeholders. Sandrov had opposed the side-track settlement approach and recently requested court fines totaling 400,000 shekels against Finbert executives for contempt, citing violations of court orders related to fund asset management.

The Slices affair emerged in late 2023 after the Capital Market Authority appointed Sandrov as special manager due to severe financial mismanagement. Approximately 900 million shekels of members' funds were diverted to private offshore funds, some managed by Finbert, contrary to law and without clear recovery prospects. Prior side agreements involved entrepreneurs Liyam Israeli and Amnon Yakobi, who committed to partial repayments through the special manager.

Erez and Ben Shoshan responded that the court did not reject the settlement content or criticize it, acknowledging the significant efforts invested and recommending renewed negotiations with the authorized manager. They called on Sandrov to adopt the court's recommendation and advance an agreement allowing members to choose between the proposed options to expedite fund recovery. They intend to appeal the court's procedural ruling to the Supreme Court.