Knesset hears how binary options cos were built on lies

Binary options Photo: Shutterstock

Former binary options employees told the Knesset committee hearing on the bill to outlaw the industry about the lies that they told.

"I worked in this industry for two years. I got into it because a friend told me that he worked as an investment portfolio manager, and it sounded interesting to me. I had no experience in the profession. From the time I arrived, I called customers and persuaded them to invest. I could tell them anything I wanted, make promises, and say anything, lie without any problem, and the same was true of everyone I worked with, most of whom were young people my age. Most of the companies in Israel make a living by taking percentages of the money invested, regardless of what happens to the money later. So everyone loses in the end," a former worker in a binary options company said today during an initial hearing in the Knesset Reforms Committee of a bill to amend the Securities Law to ban companies in Israel from offering trading services in binary options to customers residing overseas.

Another young man who worked for a short time in one of the companies said, "As soon as I left, I received a tempting offer to work in connecting and analyzing cyber threats. What was actually involved was collected data about people, mainly through the social networks, aimed at providing leads, telephone numbers, and e-mail addresses that the company was collecting in order to persuade customers to join. I also got offers to construct platforms that sought to present false values of shares, among other things. The money they are offering is so tempting that it's very hard to say no. The salary of a programmer in the binary options field is as much as NIS 40,000 a month, and that's an awful lot for a demobilized soldier. For building a platform, they offer NIS 500,000-1,000,000."

The deliberations by the Reforms Committee, chaired by MK Rachel Azaria (Kulanu), taking place following the exposure of the binary options industry to public scrutiny by the Israel Securities Authority and media in recent years. Among other things, this included a series of articles in "Globes" that revealed the naked truth about this dubious industry and opened a Pandora's box, with stories of investors from all over the world claiming to have been cheated out of hundreds of thousands of euros and dollars that were transferred to Israeli companies and disappeared.

In March 2016, the Securities Authority barred marketing binary options to Israeli customers under the allegation that such trading amounted to gambling. At the same time, since the Securities Law protects only investors in Israel, trading theaters located in Israel were able to continue offering customers outside Israel services through which they could trade in various financial instruments, including binary options, without regulation or supervision.

As a result, the Securities Authority, the police, and other enforcement authorities in Israel began to receive many complaints and requests from authorities outside Israel and from citizens of foreign countries concerning the activity of companies from Israel towards customers from various countries, mainly in binary options trading theaters. It turned out that in many cases, the trading being offered in the trading theaters was a cover for criminal activity, such as fraud.

According to the explanations accompanying the bill, "The phenomenon has now reached dimensions with extensive negative effects in the world, while causing significant public relations damage to Israel in general, and to the capital market in Israel in particular, and is liable to fan anti-Semitism."

The proposed amendment is designed to close the current loophole by granting enforcement authority to the Securities Authority in activity conducted by trading theaters managed in Israel, but aimed at overseas customers.

In addition, according to the amendment, offering a binary option financial instrument or a different type stipulated by the Minister of Finance will constitute a crime under the Prohibition of Money Laundering Law.

Taking part in the debate were Securities Authority chairman Prof. Shmuel Hauser, representatives of people from around the world victimized by companies from Israel dealing in binary options trading, representatives of the companies, former employees, and others.

Published by Globes [online], Israel Business News - www.globes-online.com - on July 31, 2017

© Copyright of Globes Publisher Itonut (1983) Ltd. 2017

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Binary options Photo: Shutterstock
Binary options Photo: Shutterstock
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