Clarification to the Public – 29/3/15
In response to further public inquiries addressed to the ISA regarding the Kela Fund, and following the earlier ISA clarification, the ISA stresses that it has not prohibited the Kela Fund from meeting its obligations to its clients, and specifically has not prohibited the Kela Fund from making any payments or redemptions to its investors. Nothing in this statement reflects the ISA’s opinion about the Fund’s ability to meet its obligations.
Clarification to the Public – 24/3/15
In response to several inquiries received by the ISA regarding the investigation involving the Kela Fund, the ISA wishes to inform the public that while several restrictions have been imposed on Amir Bramly (see below), these do not include restrictions on the Fund managers’ communications with clients or payments made by the Fund to its investors. The ISA further notes that any statements offered by the Kela Fund regarding its situation or ability to make payments to investors in the future have not been coordinated with or approved by the ISA.
Below is an explanation of the suspicions described in the ISA’s motion to the court, requesting house arrest and imposition of restrictive conditions on Amir Bramly:
The investigation concerns suspicions involving Kela Fund’s operations (“the Company”), which according to its own declarations is engaged in investment activities and “capital completion” for Israeli companies through short-term loans that enable such companies to meet the collateral requirements to obtain credit from financing entities. The main suspect in this case is Amir Bramly (“Bramly”) who is a director of Kela Fund and is defined on the company’s website as the Executive Chairman. His wife Daniella Bramly is the Company’s sole registered shareholder. According to ISA suspicions, Kela Fund raised several hundred million shekels from hundreds of investors without issuing a prospectus as required by the Securities Law 1968, by misleading the investor public and the ISA.
Additional suspicions concern misleading customers to believe that the proceeds of the capital raising would be directed to “capital completion” operations, while in effect significant amounts of up to several million shekels were transferred to finance Bramly’s private investments and/or the investments of his related companies. Accordingly, Bramly is suspected of committing the following violations: offering securities to the public without a prospectus under Section 53(a)(1) of the Securities Law 1968; misleading items in notifications to the ISA under Section 53(a)(4) of the Securities Law 1968; failure to comply with ISA requirement under Section 53(b)(10) of the Securities Law 1968; fraud, an offense under Section 415 of the Penal Law 1977; fraud and breach corporate fiduciary duty under Section 425 of the Panel Law 1977, and; money laundering violations under Sections 3(a) and 4 of the Money Laundering Prohibition Law 2000.
The motion filed with the court noted that investigation findings indicate that between 2012 and 2014, the company raised hundreds of millions of shekels from several hundred investors through a bond issue, promising high yields to investors, without publishing a prospectus as required by law. Investigation findings to date indicate that the Company provided misleading information to the ISA regarding the identity and precise number of the investors as well as their total investments. Investigation findings give rise to the suspicion that Kela Fund made misrepresentations to the investors, according to which the Company would invest the funds its raises for “capital completion” for Israeli corporations, while in effect and contrary to information published on the Company’s website and in contrary to agreements between the Company and its investors/bondholders, most of the investors’ funds were used for Bramly’s private investments and/or investments in his related companies. A large number of findings support the suspicions regarding Bramly’s involvement in these violations.
In response to the motion filed with the court, the Court decided that Amir Bramly will remain in house arrest until March 24, 2015 and will deposit a bank guarantee in the amount of NIS 1.7 million. A stay of exit order will be issued against Bramly, he will be ordered not to contact any person involved in the affair regarding the affair under investigation, or discuss the affair under investigation or Kela Fund with anyone.