Lawsuit request against the Forex company Colmex and Meir Barak
Lawsuit request against the Forex company Colmex and Meir Barak: collecting interests and dividends unlawfully
According to the prosecutors, the company has made unlawful collections of interests and dividends – and misled them into thinking they were a normal brokerage company acting as a “market maker”
A request for the approval of a class action lawsuit for 200 million Shekels has been filed today against the Forex company Colmex, and its owner Meir Barak. The plaintiffs – Arthur Yeborski and Nir Elina, represented by lawyer Dan Tzuk- claim that the company made unlawful collections of interests and dividends from its clients, and misled them into thinking they were a normal brokerage company, when in fact the company acted with a built-in conflict of interests – with it being the other party in every deal. According to them, the situation lead to the clients’ loses being directly transferred as profits into the company without the clients’ knowledge.
According to the plaintiffs, the contracts they signed stated that the company does not pay dividends for the possession of the securities- a fact that suggests that the company does not in actuality purchase the securities, and that the trading is in reality done with Colmex.
The plaintiffs complain that Colmex made unlawful collections of dividends on the basis of short selling- sums which passed directly to its pocket, since in fact it did not loan the securities to a third party on the stock market.
The plaintiffs further complained that Colmex charged its clients unlawfully, on the basis of short selling stocks of low liquidity that are difficult to loan. According to them, since the company was not in fact covered for this action, it is not allowed to execute the charges.
In addition, the plaintiffs claimed that Colmex charged a commission for the transfer of market orders to various stock markets, but in fact, despite the commission being collected, the stock exchange listing was done virtually within the company only.
The plaintiffs wrote to the court that they do not have the precise data regarding the extent of the company’s activity, and that they assess that at least 5,000 clients managed their finances with the company. They further write that according to their assessments, the average rate for investment in an account varies from 20-40 thousand Shekels. From here they quantified the class action lawsuit amount of 200 million Shekels.
The lawsuit for the retrieval of transfer commissions and dividends, which the company charged unlawfully, is quantified by the plaintiffs at 80 million Shekels.
Colmex is one of the 10 companies whose request for Stock Exchange and Trading Platform license has yet to be revoked by the Israel Securities Authority. Lately the company purchased the client list of the Forex company Smart Capital, which was owned by Itzik Noy, formerly chairman of the Stock Exchange and Trading Platform Organization, and most of the employees also transferred with it. As part of the agreement, it was set that Colmex will continue to pay the owners of Smart Capital parts of their income from those clients.
Despite the picture companies present to investors, it is necessary to emphasize that to this day none of the Forex companies in Israel are regulated, or been approved by the Israeli Securities Authority. The Israel Securities Authority continues to investigate all the companies currently active, and to review whether they are operating unlawfully or deceiving their investors.
Colmex commented: “We have yet to receive the statement of claim; after we do we shall respond appropriately.”
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