Bank Hapoalim (LSE: BKHD; TASE: POLI) will pay investors in the Prisma China mutual fund (formerly Lahak China mutual fund) NIS 2.7 million in compensation for dividends that were not distributed to them over three years. By law, dividends distributed by the companies in which a mutual fund invests, must be reinvested in the fund in full, and the fund’s unit price must be updated accordingly. However, the dividend was not distributed in this fund for the past three years.
The effect on the unit price for the Prisma China mutual fund ranged from 0.2% to 1.6% over the three-year period. In 2006, Prisma Capital Markets Ltd. acquired the mutual fund when it acquired Lahak Mutual Funds Management Ltd. from Bank Hapoalim. The bank nevertheless continued providing operating services for the mutual funds. The error was discovered in August - with both Bank Hapoalim and Prisma claiming the credit - and it was decided to compensate the investors for the money that was not paid.
The compensation money will be distributed to the investors via Prisma. The China Prisma mutual fund will pay an additional NIS 443,000 from its own money for the surplus. Prisma China investors will therefore receive NIS 3.1 million altogether.
Bank Hapoalim said, “An internal audit that we initiated found that one the brokers with whom the fund worked did not notify us about the accredited dividends. When we discovered this, we notified the fund to this effect, and the full dividends accruing to the fund have been transferred. The customers will be credited accordingly on the basis of the relevant dates.”
Published by Globes [online], Israel business news - www.globes.co.il - on October 1, 2007
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