The companies, in this case, did not prevent the commission of the serious offenses over a period of time, but when they discovered the offenses that had been committed, they immediately notified the authorities and led to the opening of an investigation.
Counsel for the accuser noted the seriousness of the defendants' actions, which is learned not only from the large number of false registrations and violations of the Securities Law, but mainly from the degree of harm to the protected interests of the reporting offenses and the high degree of severity that accompanied the offenses and which found its expression in the great theoretical damage caused to the investors as a result of their actions, the great sophistication with which the offenses were committed, and the lack of a culture of obedience that is learned from the basic difficulties that occurred in the supervisory and compliance systems of the defendants.
Counsel for the accuser insisted that during the four years in which the offenses were committed, each and every one of the parent company's quarterly and annual reports included misleading details that referred to material items in the reports – income items, profit items, inventory items and customer items, and the deception amounted to tens of millions of shekels per year, as evidenced by the need to reduce capital in the amount of more than NIS 70 million.
Counsel for the accuser sought to determine that the defendants' actions caused great damage to the investors, as detailed in section 40T(a)(4), and to determine that the harm to the protected interests that were intended to protect the reporting offense was high.
Counsel for the accuser noted the interests that are harmed by the reporting offense, and sought to emphasize in particular the interest in protecting the ability of investors to make informed investment decisions based on open information in their possession. These investors received distorted reports for 4 years, as a result of deliberate deception and false entries in the financial statements.