ISA Chairman Makes First Comment on Investigation into Bezeq: ‘There is No Leniency in Enforcement, No Exemption for Celebrities’

"There is no leniency in enforcement, no exemption for celebrities,” said Prof. Shmuel Hauser, chairman of the Israel Securities Authority, speaking Tuesday at the Eli Hurvitz Conference on Economy and Society, in a session titled “Credit for Small and Medium Businesses: The Key for Growth?”

“It bothers me and disappoints me when controlling shareholders forget that, regarding public companies, public shareholders are their partners," Hauser said.

Hauser spoke about the decision to launch an investigation into the Bezeq telecommunications company.

"I want to talk about two economies today - the economy of large companies and the economy of small companies,” he said. “As you know, this morning we opened an open investigation into the matter of Bezeq, relating to deals made with its controlling shareholder. Since the investigation has only just begun, I of course cannot say anything about it.

“Today, we will talk about the gaps between the two economies and the easements we are promoting regarding small businesses. Enforcement issues are not easy: there is no ‘celebrity exemption.’”

Hauser said ISA’s approach is to facilitate regulation where possible, and to enforce the law in an uncompromising manner where necessary.

“Regarding this matter, I will only say that I am disturbed and disappointed by those cases in which controlling shareholders forget that, with regards to public companies, the shareholders – the public – are their partners. "

During the session, best practices were presented to finance small and medium-sized businesses with the help of the capital market, and the challenges of establishing a special stock exchange or secondary list for small and medium-sized businesses were analyzed.

The importance of small- and medium-sized businesses to Israel’s economy is enormous, according to Hauser. There are about 520,000 businesses in Israel that are defined as tiny, small or medium. They account for the overwhelming majority of all businesses in Israel and employ about 61% of workers in the business sector. The contribution of small- and medium-sized businesses to Israel’s GDP is 54%.

Yet, he explained, despite efforts to create more balanced regulations, remove barriers and incentivize every type and size of company that is considering financing its activities through the capital market, the gap is still apparent. Specifically, this chasm is noticeable with regards to the options of financing through the capital market available to medium-sized companies. These companies are predominantly funded through the banking system, where the cost of credit for small and medium businesses is often double that of credit to large businesses, although the credit losses of banks from small- and medium-sized business do not seem to justify this gap.

ISA’s position is that these companies can potentially serve as a real engine for growth in the Israeli economy. As such, new and creative thinking about how to ease and remove barriers to financing is justified.

Specifically, Hauser offered four ideas for discussion:
1) Bringing small- and medium-sized companies into the Tel Aviv Stock Exchange by easing relevant, applicable rules.
2) Allowing small and medium businesses to be exempt from regulation.
3) Bringing new products to TASE that will invest in small and medium businesses.
4) Creating a stock exchange for small- and medium-sized companies.

With regards to the new exchange, Hauser said the hope is to finalize plans for it by the end of July.

“The only question is what incentives will we give to small businesses to take part in such an exchange,” he said.

About the Eli Hurvitz Conference on Economy and Society
Eli Hurvitz Conference on Economy and Society (formerly known as the Caesarea Forum), Israel’s leading economic conference, took place this year under the banner “Two Economies – One Society.” The conference, which is sponsored by the Israel Democracy Institute (IDI), focused on roadblocks and opportunities in a new economy versus a renewable economy, the future workforce, improving regulation, doing business, and rethinking the Israeli pension system.

Now in its 24th year, the conference serves as a juncture for public and professional discourse on society and economy. The goal is to improve the government’s decision-making processes and the quality of Israel’s social and economic policies for the benefit of the entire public.

Learn more about the conference>>

Media: Maayan Hoffman at or 050-718-9742.