Israel Securities Authority Fines Ksem Mutual Funds 1 Million Shekels

The Israel Securities Authority (ISA) has imposed a 1 million shekel monetary penalty on Ksem Mutual Funds following fraudulent activities committed by a company employee. The penalty was levied based on an administrative enforcement agreement signed between the authority and Ksem Mutual Funds, which is controlled by The Phoenix.

The involved employee is Nir Mendes, who worked at the company between 2021 and 2024. Mendes was arrested in June 2024 on suspicion of pocketing approximately 1.3 million shekels through fraudulent securities trading alongside his friend, Sahar Varon. According to the suspicion, Mendes exploited his access to Ksem accounts to execute coordinated transactions against private bank accounts owned by Varon.

According to the ISA, the employee's irregular activity exposed unit holders to financial risk and should have triggered Ksem's real-time control mechanisms. However, the fund manager failed to supervise and control the employee's trading activity, and even after controls detected the anomaly belatedly, only a partial and insufficient investigation was conducted.

Following the discovery, Ksem cooperated with the authority, reinforced its controls, and compensated unit holders affected by Mendes's actions, whose case was forwarded to the Tel Aviv District Prosecutor's Office last year. Ksem Mutual Funds is Israel's largest trust company, managing 123 billion shekels in assets, and is headed by Avner Hadad and Moshe Almog.