Regulator Accuses More Investment House of Improper Takeover Attempt at Orion
The Capital Market Authority exposed severe governance failures at More Investment House over an unauthorized attempt to seize control of Orion's board using client funds. Financial sanctions are being considered.
Corporate Governance Failures
The Capital Market, Insurance and Savings Authority, headed by Amit Gal, has uncovered severe deficiencies in the corporate governance and decision-making processes of More Investment House (Mor). The regulatory probe revealed that the investment house exhibited involvement that deviated significantly from acceptable institutional activism during the election of directors for Orion, a company spun off from G City.
According to the authority, Mor utilized members' pension and savings funds to influence the election process at Orion. The regulator found material flaws in how Mor promoted candidates for the Orion board and exercised voting rights derived from holding client assets.
Attempted Board Takeover
Mor, which holds an 18% stake in Orion, aligned with Habita Living, a Central and Eastern European real estate investment firm holding a 7% stake. The two entities proposed the appointment of four directors: Habita Living co-CEOs Yossi Zeituni and Yishai Sasson, alongside owners Ariel Prestman and Yovav Carmi.
In contrast, Norstar, which holds 24.4% of Orion's shares, attempted to advance the appointments of chairman Eran Yaakov, G City CEO Keren Kelifa, and Sami Babkov.
With two external directors on Orion's board, appointing the four nominees from Habita and Mor would have resulted in a board takeover. Ultimately, Mor voted in favor of three of the nominees—Zeituni, Sasson, and Carmi—while opposing Prestman. Mor also voted against Kelifa and Yaakov, but supported Babkov. In the end, the nominees failed to secure the required majority. Notably, Mor's proxy advisor had recommended opposing all four candidates.
Regulatory Backlash and Intermediaries
The authority's audit, which was delivered to Mor, highlighted that the move was never brought before Mor's investment committee for discussion or approval, despite statutory requirements. Furthermore, the action was not anchored in the company's voting policy, nor was the public updated on any policy changes.
The Capital Market Authority stated:
"The level of influence that Mor sought to achieve in Orion significantly exceeds the reasonable boundaries of involvement for an institutional investor acting as a shareholder by virtue of managing client assets."
The regulator emphasized that Orion is a company without a controlling core, making the coordinated effort with another shareholder highly problematic.
The probe also revealed the involvement of Phoenix Underwriting, which holds a 20% stake in Orion and is managed by Eyal Greenbaum and Udi Tobin. Phoenix Underwriting acted as an investment banker and intermediary, delivering a strategic presentation prepared by Habita Living to Mor to coordinate with other institutional bodies.
The Capital Market Authority viewed the findings with high severity and indicated it may impose financial sanctions on More Investment House. Mor has declined to comment on the matter.
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