Rights group threatens lawsuit over New York's investment in Israel bonds

The advocacy group Democracy for the Arab World Now (DAWN) has issued a formal warning to New York State and City officials, stating it is prepared to initiate legal action to block future purchases of Israeli bonds.

The warning comes amid renewed focus on the investments, following New York City Comptroller Mark Levine's recent announcement of plans to resume buying the bonds. The city had previously divested its holdings in 2024.

In a statement released Friday, DAWN's executive director, Sarah Leah Whitson, warned that such investments breach officials' international legal obligations and their fiduciary duties to taxpayers.

“For too long, our public officials have prioritized politically expedient support for Israel, using taxpayer money to finance Israel’s brutal war machine,” Whitson stated.

New York State's Common Retirement Fund is a major US investor in Israeli debt, holding over $352 million as of March 2024.

Israel bonds, which are affiliated with Israel’s finance ministry, are sold to both individual and institutional investors in the US, functioning as direct loans to the Israeli regime.

The legal challenge hinges on the argument that financing Israel supports violations of international law. According to DAWN, the investments expose the state and city to significant financial, legal, and reputational risk.

“Investments in Israeli state securities, including Israel Bonds, effectively allocate public funds to sustain criminal acts,” said Alex Smith, a legal advisor for DAWN.

The issue has sparked a political clash within the New York City government.

Mayor Zohran Mamdani, who took office on January 1, has publicly supported divestment from Israel over its genocide in Gaza.

One of his first acts was revoking an executive order that barred city agencies from boycotting or divesting from Israel.

Comptroller Mark Levine, however, has defended the bonds as a financially sound investment, despite Moody's credit agency noting that they are becoming "increasingly risky."

DAWN has sent letters to Governor Kathy Hochul, State Attorney General Letitia James, Mayor Mamdani, and both the city and state comptrollers, demanding an immediate halt to new purchases or renewals of Israel bonds.

The group calls for a published policy prohibiting such investments “until Israel ends its unlawful occupation, apartheid rule and ongoing genocide,” and warns of supporting litigation if its demands are ignored.

The United Nations stated in September 2025 that Israel’s war on Gaza constitutes a genocide. The International Criminal Court has an outstanding arrest warrant for Israeli Prime Minister Benjamin Netanyahu.

According to the Gaza-based Health Ministry, at least 71,657 Palestinians have been killed and 171,399 others wounded in Israel’s war on Gaza.

Last year, a fragile ceasefire deal, brokered by the United States, was reached in the strip. Since the truce was reached in early October, Israel has killed over 490 Palestinians.

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