Bank Leumi also maintained several hundred securities accounts that were beneficially owned by US customers and managed more than $500m in securities assets for US customers over the same period.
To manage and mitigate the risk of violating US laws, the bank started withdrawing its US cross-border business in 2008.
However, approximately 100 US customer securities accounts remained open with the bank three years later, and bank employees continued to have contact with those customers.
Core protections
“The broker-dealer and investment adviser registration provisions provide core protections to investors,” said Scott Friestad, associate director of the SEC’s Division of Enforcement. “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.”
Disgorge profits
Bank Leumi made nearly $3.4m in profits from its US cross-border business, the SEC’s investigation found.
The bank disgorged $3.3m of those profits in a deferred prosecution agreement with the US Justice Department in December 2014.
It must disgorge the remaining $65,700 in its settlement with the SEC, plus pay $8,713.20 in interest, and a $1,517,715 penalty.
Bank Leumi has accepted the SEC’s findings, acknowledged that its conduct violated the federal securities laws, and accepted a censure and a cease-and-desist order.
Murky history
The recent investigation is not the first time the Israeli bank has been the subject of an SEC probe.
According to Israeli newspaper Haaretz, claims that Leumi helped US customers evade taxes between 2002 and 2010 resulted in a $400m fine in 2014 by US authorities.
In 2015, Leumi set aside about $5m in connection with the recent SEC investigation into its cross-border activities.
