ISA launches investigation into Netanel Group over financing of shareholder's private events
The Israel Securities Authority (ISA) has launched an investigation into Netanel Group following the company's use of corporate funds to finance private events for controlling shareholder Aryeh Netanel. The firm has admitted to significant internal control failures.
The use of public company funds by Aryeh Netanel, who controls the firm, to finance private events is now under investigation by the Israel Securities Authority (ISA). In April, the real estate company Netanel Group reported that it had retroactively approved its participation in financing two private events held by its controlling shareholder, Aryeh Netanel, at a cost of 1.28 million shekels.
This evening (Monday), Netanel Group reported that in early May and again in mid-June, the Investigations, Intelligence and Trading Control Department of the ISA demanded information and documents regarding those events, and that the company is cooperating with the ISA's requests. The department conducts ongoing audits and investigative procedures to examine suspicions of criminal offenses in the capital market, as well as administrative inquiry procedures to examine suspicions of administrative violations. At this stage, it is not known which of the two procedures the case concerning Netanel Group has been directed to.
The company did not explain in its report to investors why it reported the ISA's requests only now, almost three months after the ISA's first request and a month and a half after the second. In April, when it reported on its problematic conduct, Netanel Group did not disclose to its investors what those private events were. However, Calcalist has learned that the events were the wedding of Netanel's son, held last June at the luxury Setai Kinneret hotel, and the bar mitzvah of Netanel's grandson, celebrated in September 2024 at the Isla Brown Corinthia hotel in Greece.
The public company retroactively justified its participation in covering the costs of the events—800,000 shekels for the 2025 event and 477,000 shekels for the 2024 event—by stating that combining company retreats with the controlling shareholder's private events allowed employees a "superior experience that is beyond the level that was customary at company-only events." The company's management, headed by Aryeh Netanel and his brother Dani, approved the participation without receiving approval from the audit committee or the board of directors, citing "an error in judgment and good faith."
Netanel Group emphasized that the controlling shareholder ultimately decided to bear the cost of the company's share in the events himself and to return the payments it had transferred, approximately 1.1 million shekels. Retroactively, the company's audit committee determined that the matter was made possible due to a material weakness in its internal control, which was ineffective, and which it is working to correct. Netanel Group stated: "The company was requested to provide documents by the ISA. All activity, including these reports, was done in close coordination with the ISA. The company was requested to publish this, and it did so, and it is cooperating with the ISA's examination regarding the events it has already reported on."
