Admittedly, the chairman of the authority may remove a member from his position on the committee, but only if the circumstances specified in the Securities Law are met, and only if the consent of the Minister of Justice has been given (section 52 35(b) to the Securities Law). It is also true that the committee has a functional connection to the authority. Among other things, its deliberations take place in the Authority's offices, the committee's procedures are published on the Authority's website as well as its decisions, and the resignation of its members is done by submitting a letter to the Authority's chairman (Section 7.2 of the Rules of Procedure for the Work of the Administrative Enforcement Committee, Sections 52S(a), 39(b), 35(a) to the Securities Law, respectively). However, this functional connection does not change the nature of the Enforcement Committee, as described above.
Hence, it is not possible to accept the position that the Enforcement Committee is an "arm" of the Israel Securities Authority, nor can it be said that the two are the same. This is a professional administrative tribunal whose members have special expertise in the legal and economic field (AP (Tel Aviv District) 37447-10-13 Africa Israel Industries Ltd. v. Israel Securities Authority, para. 33 (August 2, 2014) (hereinafter: the Africa Israel case (the scope of judicial review)).
- Moreover, Lorenzi argues that a determination according to which the authority is entitled to appeal the committee's decisions will lead to the creation of increased dependence on the authority and harm to the independence of the chairmen of the panel, whose term of office is at the discretion of the chairman of the authority. But in my opinion, the opposite is true. After all, the possibility of appealing against the decision of the Enforcement Committee means that insofar as the Authority believes that there was an error in the committee's determination, the way is open for it to petition the court. The fact that even from the perspective of the Authority, the Committee's decision is not "the end of the story" is sufficient to reduce the alleged "incentives" to reduce the Committee's independence, to the extent that such exist (and the claim of their existence has not been substantiated), and not to increase them.
I also cannot accept Lorenzi's position that recognition of the possibility on the part of the authority to appeal against the committee's decision means that it is possible to "allocate improvements" and that the court constitutes a "safety net". It goes without saying that the Authority's decision to appeal against the committee's decision does not lead to the conclusion that it will win its petition.
- Nor can I accept the position that a determination that the authority cannot appeal against the committee's decision expresses the legislature's desire to "balance" the authority's surplus powers in the framework of the administrative proceeding. Indeed, it is the Authority that initiates the administrative proceeding, conducts the investigation, and transfers to the panel the material that the Chairman of the Authority believes is necessary to conduct the proceeding. On the other hand, a person against whom a proceeding has been filed is entitled to argue his arguments in writing and orally, and to request that additional persons be summoned to appear before the panel (section 52 Matte to the Securities Law). In any event, even if we say that the Authority has "excess powers" over those granted to the violator in the framework of the enforcement proceeding, this does not lead to Lorenzi's conclusion. This does not lead to the conclusion that this surplus was "balanced" by imposing a restriction on the authority's ability to appeal the committee's decision.
- I am of the opinion that considerations relating to the establishment of guidelines for the conduct of the Authority support the position that it is entitled to appeal against the decision of the Enforcement Committee. As will be explained below, I accept the view that the choice of the path of appealing a "petition" dictates the scope of the court's judicial review, so that it focuses on the legal questions and not on the factual decision. If, even after the enforcement committee has rejected the authority's legal position, the authority continues to hold it, it is important that it be able to bring its position before the court. This is in order to establish clear and guiding rules on legal issues (see The Africa Israel Matter (Scope of Judicial Review), paragraph 48). The value of establishing clear legal rules is great, whether these rules are determined in light of a committee decision that accepted the authority's position or one that rejected it. It can even be said that where the authority continues to hold a position that is inconsistent with the committee's determination, the value of judicial review is particularly great. The ISA is the regulator in the field of securities. Therefore, directing its conduct by way of setting guidelines is of great importance, and in this sense also contributes to ensuring the maintenance of the required balances. In this context, I accept the words of the Honorable Justice Y. Sharvit In the case of Edri El according to which recognition of the authority's right to appeal the committee's decisions advances the purposes of the Securities Law, and as he puts it, "The right to file such a petition will enable judicial oversight that will improve the committee's decisions, improve the protection of investors in the capital market, and promote the ISA's ability to fulfill its role, which is as well known as 'Safeguarding the interests of the investing public in securities'..." (ibid., para. 65, emphases in the original, M.R.).
- Hence, in my view, the Authority is entitled to appeal against the decision of the Administrative Enforcement Committee, and in accordance with this conclusion, I will examine the additional threshold arguments raised by Lorenzi.
The Additional Threshold Claims
- Lorenzi argues that the petition was filed without authority, because at the time of its filing, there was no chairman of the authority – who is the only one authorized to decide whether to file an administrative petition. It was further argued that the petition was filed without the material documents required by the Rules of Procedure, and that the Authority included new claims in an improper attempt to create a negative impression of Lorenzi.
I am of the opinion that even these arguments of Lorenzi do not justify the dismissal of the petition in limine.
- The law does not stipulate that filing a petition is the exclusive authority of the chairman of the authority. Since I have determined that the Authority is entitled to file a petition, and in the absence of an explicit requirement in the language of the law, there is no basis for the determination that in the absence of an incumbent Chairman, the Authority is suspended from its ability to petition the Court. Nor should the authority to order the filing of a petition be inferior to the authority to order the opening of an administrative proceeding. After all, the filing of the petition is an objection to the committee's decision in a proceeding that has already been decided to be conducted. In the circumstances of the case, I am of the opinion that the decision to file the petition was made by me A joint team composed of senior officials of the Authority, including a legal representative, does not lead to the dismissal of the petition in limine.
- With regard to the non-attachment of documents, I will note that there is a reason in Lorenzi's position that the Authority should have attached to its petition, at the very least, the documents to which it referred. Even given the scope of the judicial review given to the court hearing the petition, the attachment of the documents to which the authority refers in its petition is necessary, if only for the purpose of understanding its arguments in a real way. However, the lack of attachment of the documents does not justify dismissing the petition in limine. It certainly cannot be said that the matter before me becomes "theoretical" (verse 110 of Lorenzi's response). Lorenzi himself attached many documents, and the Authority made it clear that if additional documents were required, there was no impediment to submitting them. Even the claims of creating an "atmosphere" in order to "blacken" Lorenzi before the court do not lead to the dismissal of the petition. I will note that in my opinion, factual claims that are irrelevant and present Lorenzi in an unflattering light should not have been raised. However, they do not constitute a claim, even approximately, of a lack of cleanliness on the part of the Authority.
- Hence, I have not found that the respondents' arguments justify denying the ISA access to a proceeding that would allow judicial review of the committee's decision.
And from here we come to a discussion of the arguments on the merits of the matter.