Slice Affair: Court Rejects Request to Convene Members' Meeting for Finbert Settlement

The Tel Aviv District Court rejected the request of attorneys Eitan Erez and Mor Ben-Shoshan, who represent a group of members in the Finbert funds, to convene a members' meeting to vote on a settlement agreement signed with the funds aimed at returning part of the investors' money in the Slice affair. Judge Sigal Yaakobi determined that the proposed outline "has no basis in law" and that there is no legal framework that allows forcing the settlement on members who oppose it.

Last month, attorneys Erez and Ben-Shoshan filed an exceptional request to the court after formulating a principles agreement with the insurance agency and fund management company Finbert. According to the outline, Slice members who were harmed by the funds' investments could choose between two alternatives: receiving 51.5% of their money within 18 months, or continuing to manage the investment in the funds for a period of up to six years for a higher return. The choice was intended to provide a solution for members with different risk levels.

However, the judge determined that only the authorized manager of Slice is authorized to propose a settlement plan according to the law, and that the applicants did not point to any other procedural framework that would allow approving a settlement that would bind all members. Therefore, even if most members had supported the settlement, it could not have been approved in the current proceeding.

However, in her decision, the judge left a door open for further promotion of the outline. She emphasized that the decision does not prevent individual members or groups of members from reaching agreements with the funds, as long as they do not harm the rights of other members and do not bind those who are not parties to the settlement. She further noted that the efforts of attorneys Erez and Ben-Shoshan to formulate a solution should not be taken lightly, and called on the authorized manager of Slice, CPA Efi Sandrov, to examine the principles of the settlement in cooperation with them, to see if they could be integrated into an official settlement plan that would receive the support of all parties.

Sandrov was a prominent opponent of the decision by Erez and Finbert to choose a side path to reach compensation agreements for Slice victims. This month, the authorized manager filed a request to the court to impose fines of 100,000 shekels on Idan Naftaji and Ilit Motula, and a fine of 200,000 shekels on Gabriel Kokashvili, senior officials at Finbert, for contempt of court. This was after it was discovered, according to him, within the framework of the settlement submitted by attorneys Eitan Erez and Mor Ben-Shoshan, that the funds in the Finbert cluster are withdrawing members' money from the accounts in the funds, contrary to the court order that prohibited reducing members' assets and prohibited adding signatories to the accounts.

The Slice affair was exposed at the end of 2023, after the Capital Market Authority appointed Efi Sandrov as the special manager of the company following severe deficiencies found in the management of savers' money. According to the Authority's findings, about 900 million shekels of members' money were directed to private foreign funds, dubbed "the red funds," contrary to the law.

Attorneys Erez and Ben-Shoshan stated in response:

"The court did not reject the settlement agreement formulated with the Finbert funds and did not even criticize its content. On the contrary, in its decision, it recognized the many efforts invested in formulating the outline and recommended that the authorized manager return to the negotiating table with the goal of reaching agreements. We disagree with the court's determination that there is no relevant procedural framework for approving the settlement, and we intend to file a request for leave to appeal to the Supreme Court."