UPDATED December 3, 17:55: Two years ago, Brooklyn developer All Year Management contributed to a major panic in Tel Aviv’s bond market after disclosing that $3.7 million had been “accidentally” transferred to chairman and CEO Yoel Goldman’s personal accounts.
The Israel Securities Authority has now imposed penalties on the company for violations committed at that time, according to a TASE filing and two Israeli media reports.
All Year and the ISA have reached an administrative enforcement arrangement that will see the company pay a fine of 600,000 shekels (nearly $200,000), while Goldman could be fined another 250,000 shekels and be suspended from senior positions in ISA-supervised bodies for nine months if he commits certain violations in the next 18 months, Israeli media reported. All Year also disclosed the agreement on the Tel Aviv Stock Exchange.
“Under the arrangement, the controlling shareholder [Goldman] admitted to an administrative violation of not submitting an immediate report on the transfer of funds made in favor of the controlling shareholder’s property company,” the ISA said in a statement.
All Year and Goldman also admitted to negligently including a misleading detail in the financial statements for the second and third quarters of 2018, and to misleading the ISA, according to the statement.
Israeli authorities have also indicated that they are paying attention to All Year’s more recent moves. On Sunday, the company announced that it would be temporarily suspending bond payments and delaying its third quarter financial reporting. The firm’s bond prices tumbled in response.
“I take seriously a statement that a company does not intend to comply with the provisions of the law, and delays the publication of a quarterly report to investors,” ISA chairman Anat Guetta said, noting that supervision of All Year is complicated by the fact that the company is based in the U.S., registered in the British Virgin Islands, and has no other business in Israel.
“At the same time, we are aware of what is happening in the market. Our eyes are open and we will continue to demand accountability and carry out enforcement actions as required,” Guetta said. “In this market, we make sure that only players who obey the law will operate. Anyone who does not do so will be treated with the utmost severity in order to ensure that investors’ trust in the Israeli capital market is maintained.”
In the wake of All Year’s recent disclosures, ratings agency Midrooog downgraded the company drastically, from Baa2 to C. The agency estimates that the recovery rate for All Year’s unsecured Series B and D bonds is no more than 35 percent, while the recovery rate for its secured Series C and E bonds ranges from 65 to 80 percent.
This story has been updated to reflect that Yoel Goldman’s additional fine and suspension will only occur in the event of additional violations.