The US Securities and Exchange Commission has induced Bank Leumi to pay $1.6 million and admit wrongdoing to settle charges that it provided investment advice and induced securities transactions for American customers for more than a decade without registering as an investment advisor or broker-dealer.

The SEC’s cease-and-desist order finds that Bank Leumi le-Israel BM, Leumi Private Bank, and Bank Leumi (Luxembourg) SA broke s15(a) Securities Exchange Act 1934. Leumi Private Bank also broke s203(a) Investment Advisers Act 1940. The international banking group, whose headquarters is in Israel, admits that it broke the law.

The SEC’s order finds that Bank Leumi maintained several hundred securities accounts that were beneficially owned by American high-net-worth customers and managed more than $500 million in securities assets for them. Its statement on the matter says: "To manage and mitigate the risk of violating US laws, Bank Leumi began exiting the US cross border business in 2008. But despite these efforts, approximately 100 US customer securities accounts remained open with the bank three years later, and bank employees continued to have contact with US customers."

Bank Leumi’s efforts to obey US broker-dealer and investment advisor registration laws took years, during which time it continued to profit from its unlawful cross-border business to the tune (according to the SEC order) of $3.3727 million in profits. The bank 'disgorged' $3.307 million of those profits in a deferred prosecution agreement with the US Justice Department in December 2014 and is now obliged to disgorge the remaining $65,700 in its settlement with the SEC, plus $8,713.20 in interest and a $1,517,715 penalty.