Israel-based Bank Leumi has agreed to pay $1.6mn in fine to the US Securities and Exchange Commission (SEC) to settle charges that it provided investment advice and securities transactions to US customers without being registered.
The US regulator found that the bank provided advice for more than a decade without registering as an investment adviser or broker-dealer as required under the country’s securities laws.
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The bank maintained several hundred securities accounts that were beneficially owned by US clients and managed over $500m in securities assets.
The SEC said that in 2008, Bank Leumi began exiting the US cross border business to manage and mitigate the risk of violating the country's laws.
Bank Leumi made $3.3727m in profits from its cross-border business and repaid $3.307m of those profits in a deferred prosecution agreement with the U.S. Justice Department in December 2014, it found.
Bank Leumi is also required to repay the remaining $65,700 in its settlement with the SEC plus $8,713.20 in interest and a $1,517,715 penalty.
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By GlobalDataSEC associate director of the division of enforcement Scott Friestad said: “The broker-dealer and investment adviser registration provisions provide core protections to investors. Bank Leumi’s efforts to come into compliance with these laws took years, during which time the bank continued to profit from its unlawful cross-border business.”
