The Israel Securities Authority summoned Prisma Capital Markets Ltd. CEO Dov Kotler and chairman Ron Lubash for clarifications. Lubash is also managing director at Prisma’s parent company, Markstone Capital Partners Group LLC. The Securities Authority focused on two matters: did portfolio management interns work mainly in marketing, and did Prisma host bank financial advisors to meals at luxury restaurants as a benefit.
Capital market sources said that Kotler and Lubash were the latest investment house executives to be summoned by the Securities Authority, after being notified that they had deviated from the rules.
Regarding the interns’ actual work at investment house, many have been disappointed to discover that only a small part of their time was devoted to the subject of portfolio management, which they had learned. Some investment houses employ interns as customer relations managers responsible for service and customer retention, while others employ them in sales and marketing jobs, which included telemarketing, unrelated to the subject of investment management.
Kotler and Lubash were also questioned about benefits given to banks’ investment advisers. The tough competition in the mutual funds industry has led fund management companies to invest heavily in networking with bank advisors. These efforts include sponsoring fancy conventions, which sometimes include entertainment and meals. The investment houses invest so much in the bank investment advisors because they are the first and last person a private customer sees when deciding on an investment.
Prisma said that it would not comment on matters between the company and the Securities Authority.
Published by Globes [online], Israel business news - www.globes.co.il - on June 11, 2007
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