In a statement issued exclusively to The Times of Israel, Prime Minister Benjamin Netanyahu’s office on Friday called for a worldwide ban on trading in binary options, an Israeli-centered industry, blighted by fraud, that has for years been fleecing immense numbers of victims around the world out of vast sums of money.
Responding to months of reports in The Times of Israel that have highlighted the widespread fraud in the industry — which employs thousands of Israelis and turns over hundreds of millions of dollars, if not billions — the Prime Minister’s Office condemned the unscrupulous practices of the industry and called for countries worldwide to outlaw it. The statement did not say what further steps against the industry, if any, Israel is going to take.
The Times of Israel has been exposing the fraudulent industry in a series of articles since March, beginning with an article entitled “The Wolves of Tel Aviv, and has estimated that the industry here numbers over 100 companies, many of which are fraudulent and employ a variety of ruses to steal their clients’ money. Fraudulent firms lure their victims into making what they are duped into believing will be lucrative short-term investments, but in the overwhelming majority of cases the clients wind up losing all or almost all of their money.
Issued by the director-general of the Prime Minister’s Office, Eli Groner, the unprecedented statement began by noting that the Israel Securities Authority has banned all Israeli binary options firms from targeting Israelis. This step was taken, said Groner, “because preying on innocent people who are not aware of the risks they are taking is an unscrupulous practice.” Other countries now need to follow suit, the statement said.
The statement highlighted that binary options trading is far more insidious than gambling, because a gambler knows that he or she is taking great risks, while binary options salespeople routinely misrepresent what they are offering to clients and falsely claim that it is a kind of investment. The statement explained: “When somebody goes into a casino, he knows that he is gambling. But all too often, innocent people lose their savings when they are lured into offers to trade in binary options, pitched to them over the telephone, without being informed of the financial risks to which they are being exposed.”
The statement said that the Israeli authorities “have no control over what occurs in other countries,” but concluded with a plea to other countries to follow Israel’s lead in banning binary options outright: “I hope that, in other countries, they will follow in our footsteps and make binary trading illegal.”
The statement was issued to The Times of Israel in the wake of ongoing requests to Netanyahu’s office for him to respond to the widespread allegations of fraud carried out for years by the Israel-based binary options firms, as highlighted on this website and, increasingly, in publications around the world.
Numerous countries, including the US, Canada and France, are investigating Israel-based binary options fraud on behalf of their citizens who have been cheated.
Some Israeli-linked investment professionals have been pleading for months for Israel to take firm action to prevent the fraudulent Israeli firms from fleecing victims abroad, warning of the damage their activities are doing to Israel’s global financial reputation.
Numerous victims from all over the world — notably in North America, Eastern and Western Europe, and Arab countries — have contacted the Times of Israel in recent months to detail how they were duped into parting with large sums of money by Israel-based salespeople, misrepresenting themselves, their location, and the nature of the transactions they were offering.
The Times of Israel has been told of suicides, family crises and numerous tales of extreme financial hardship caused to victims of the fraudulent Israeli firms.
The chairman of the Israel Securities Authority, Shmuel Hauser, last week asked the attorney general to grant him the authority to shut down Israel’s binary options industry altogether — in other words to give his office the legal means to bar the Israeli firms from approaching anybody in any country, not just Israeli firms approaching Israelis.
Hauser, the ISA said, considers Israel’s fraudulent binary options industry to be “an ugly phenomenon that harms innocent people and unfortunately fans the flames of negative perceptions of Israelis and Jews.”
Hauser had told The Times of Israel in August that “as a regulator, as a Zionist, as a father,” the fraudulent industry “looks awful to me.” He called the Israel-based companies “disgusting” and a problem of national significance, and vowed to gather all branches of law enforcement to tackle it.
Also this summer, Natan Sharansky told The Times of Israel that the Israel-based binary options industry is “repugnant,” “immoral” and profoundly damaging to the country, and urged Israeli regulators to do everything in their power to close it down. Sharansky, who heads the Jewish Agency, the primary organization responsible for immigration and absorption of Diaspora Jews in Israel, said the Agency was alerting all immigrants and other potential employees to steer clear of the industry, “which uses immoral methods to entice innocent victims.”
The US has banned overseas binary options firms from targeting its citizens. And in August, Belgium became the first European country to ban the industry.
While not all companies that offer binary options are fraudulent, many that purport to be guiding their customers in making lucrative short-term investments are in fact using various ruses, including misrepresentation, allegedly manipulating rigged trading platforms, and outright refusal to return deposits, to steal their clients’ money.