Tel Aviv Court Orders in Favour of Woman who Lost Savings to Binary Options

Six months ago the Israeli financial regulator banned Israeli binary options companies from offering services abroad, in a continuation of the earlier ban on them offering services within Israel.

In a new development, a Tel Aviv court has ordered one such company to repay a portion of the losses suffered by one of its customers – 60 percent, according to local new outlet The Marker.

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The compaint

The case concerns a 54 year old woman who sued the Manx Online Trading – which operates the websites and – for her 0.5 million NIS losses (139,309 UDS).

According to the report, the plaintiff claimed that she wanted to invest some money which she and her husband had saved following the sale of their small grocery shop. She became aware of binary options in June 2015 because adverts kept popping up on her computer screen.

She phoned the company to make initial enquiries, and thus met with a sales representative named Eden Mor. Mor presented himself as sympathetic and understanding, even sharing details of his own life. She made it clear to Mor that she did not understand investing at all, and Mor assured her that she woul be guided in her decisions and the profits and losses would be very small. They would only come out of her profit and not the original fund – and thus the plaintiff was persuaded to invest money.

She invest 30,000 shekels at first, and then another 500,000. According to her testimony, Mor or another company representatives would regularly contact her and tell her what actions to perform, and if she was not at the computer at that time she would take note and perform them later. She noted that her understanding of FX trading was and is zero.

One day in August she performed the actions as instructed and was then informed that all of her money had been lost. In a state of shock, she was informed by Mor that many customers had lost their money on that day, that he himself would have to attend a disciplinary hearing, and that her file would be sent to the company’s retrieval department.

She claims that she was manipulated.

The defence

Manx said in its defence that the customer was fully aware of the risks involved. It denies giving any investment advice. It claims that representatives actually prevented her from investing a further 1.3 million shekels, and action she took because she was unhappy with the returns.

The company claims that all of its customers knew what the risks were – as evidence, it pointed out that of the first ten trades that this client made, seven were losses. Altogether she made 175 transactions, which according to the company shows that she was aware of the risks.

The verdict

Judge Dania Keret Meir did not accept the plantiff’s claims regarding the beginning of the relationship with Manx – she phoned Manx on her own initiative and it was her decision to invest her money in binary options.

Meir did accept that Manx gave investment advice in bad faith, which was a breach of the law because Manx is not licenced to give financial advice.

Regarding the losses, Meir said that the plaintiff was not exactly devoid of responsibility or agency: “The determination that the defendants gave advice regarding the execution of transactions does not change the fact that the plaintiff is a self-employed person who also managed a securities portfolio at a bank for a number of years. The plaintiff decided to withdraw the money from the bank and look for a higher yielding investment channel.”

Her final judgement was that blame be apportioned 40/60 in favour of the plaintiff. Manx must compensate her for 60 percent of her claim, or NIS 489,000.

Binary options in Israel

Binary options was an industry which by some estimates brought in more than 2 billion USD to Israel’s coffers on a yearly basis. Unfortunately, the endemic criminal activity and cheating of customers carried out by these companies was becoming a national embarrassment, and the government was left with no choice but to ban the industry. It took this action in March 2016.

Not to be deterred, the binary options operators began marketing to foreign customers. While the Israeli regulator has no jurisdiction over foreign territories, the general consensus was that allowing online firms in Israel to steal from people in other countries was not doing Israel’s image any favours, and in the end this activity was banned in October 2017.

Binary options operators made their appeals, but the ban was finally upheld in January of this year.

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