The aim of the Regulation of Investment Advice, Investment Marketing and Investment Portfolio Management Law, 1995 (“the Advising Law") is to regulate the practice of portfolio management and investment consulting in order to ensure that investment portfolio management services are reliable and in the client's best interests, and that services are rendered by entities with the proper educational and professional qualifications. The law is designed to protect the investor public, including unsophisticated investors who place their trust in their portfolio managers.
Examples of violations of the Advising Law:
1. Licensee violations: A licensed investment portfolio manager uses his personal account, and in his wife’s account, and in the account of a company that he owns, to trade in securities.
2. Prohibition on receiving gifts: A licensed portfolio manager who manages the investment portfolios of customers valued at tens of millions of shekels contacts the manager of an investment house who wishes to sell certain securities in its clients’ accounts. The portfolio manager proposes to buy said securities if the investment house pays him NIS 50,000.