An Israeli court issued a temporary injunction on Monday, banning brokerage UTrade Premium Ltd from all investment activity, including raising funds and seeing new investors and clients, according to a report by business newspaper Calcalist. UTrade Premium’s website says that the brokerage is one of Israel’s algo-trading pioneers.
The court order followed an appeal submitted by Israeli Securities Authority (ISA) chairman Shmuel Hauser, arguing unlicensed investment activity by the company.
This is only the second time that the ISA has taken the decision to freeze activities. In his appeal to the court, Hauser stated that the ISA is suspicious that UTrade Premium is either performing securities violations, or is expected to do so. In addition, Hauser requested that the court nominate a trustee to oversee and handle UTrade Premium’s funds.
Getting out while the going is good
The ISA audit, performed last week, revealed that 40 of UTrade Premium’s 350 clients have asked to withdraw their investments during the passing months, and are still in the middle of the payment procedure.
The audit also revealed that since the ISA banned the brokerage from signing new clients last May, it has nonetheless acquired 44 new clients, pouring $3.5 million into UTrade Premium’s bank account.
“We suspect UTrade Premium investors’ funds were transferred from company’s account for other proposes then agreed upon,” ISA report noted. “In addition, we suspect that UTrade Premium is seeking for new investors, though the company will not be able to restore investors’ funds out of known insolvency”.
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Liquidity concerns regarding UTrade Premium arose, with the amount of actual cash in the bank being much less then the brokerage’s financial report claims: $77,000 compared with the $12 million reported.
“Auditing reveals UTrade Premium’s liquidity hardship, while traders asking for their cash back didn’t receive it [at all], or are receiving funds back bit by bit, through forced layout plans imposed by the company, which are expected not to be fully completed considering its current financial status”, ISA appeal stated.
With regard to this publication, ISA commented that it cannot address any specific enforcing actions. “ISA is referring the public once again to past warnings regarding uninspected investments,” it stated.
The missing CEO
The brokerage’s CEO, Aviv Talmor, currently unreachable abroad, is well familiar with clients’ complaints leading to investigations by authorities. In 2014, Talmor was investigated following a complaint submitted by one of UTrade Premium’s clients who argued that he was convinced to invest hundreds of thousands NIS by misrepresentation by the brokerage. The case was closed three months later. In another case, Talmor faced a police investigation based on suspicions of fraud, but the case was closed once again.
UTrade Premium was not available for comment.