I am of the opinion that there was no mistake in the way the members of the panel applied the "post-factum" test, nor in their conclusions.
Although the test according to the Reporting Regulations examines the information "ex ante", the behavior of the price of the security after the information has been published can be a certain indication of the significance that the investing public attributes to the information (Malka case, para. 72; Yamin Wasserman, at p. 502; Paserman-Josefov , pp. 185-186 and the references cited therein). An examination of the decision of Kastiel and Dekel-Shafrir shows that they treated the lack of effect that the disclosure of the breach had on the share price as a "certain indication" or an "indirect indication" in a manner consistent with the framework established by law. Admittedly, this is only an auxiliary test (C.A. 5174/97 Keren v. State of Israel, 52(2) 177, para. 14 (1998); The Rozov case, paragraph 13 of the judgment of the Honorable Justice M. Cheshin; Matter of Right, paragraph 83). It is also true that there may be cases whose circumstances weaken its significance, such as where at the relevant times another event occurred that affected the entire market. However, even given the aforementioned qualifications, this is a test that examines the trading in the security after the disclosure of the information in question, and there is no reason to ignore it in examining the materiality of the information. In this context, I will note that I have not found a basis for the position that its implementation assumes a certain trading volume, and the Authority has not even supported this position in case law or opinion.
- The ISA argued that as part of the totality of the data affecting the materiality of the information, the statements of the lawyers at the meetings of the board of directors should also be included. According to its position, they should be regarded as opinions given to the respondent according to which in a situation of breach of the loan agreement, the company is required to report to the public, and this shows that the information was material. The Enforcement Committee did not find that the statements were sufficient to change its determinations.
At the meeting of the board of directors on April 9, 2018, the lawyer answered a question from one of the directors and said that beyond reporting the loan, if the borrower does not meet its terms and is in breach, disclosure will have to be given. The discussion on the board of directors continued, as Lorenzi noted that in the event of non-payment of interest, he could and would prefer a compromise, at which point the lawyer noted that the amendment of the agreement in material aspects would require reporting, and its amendment in non-material aspects would not require reporting. Kastiel and Dekel-Shafrir noted that they are inclined to the position that from the lawyer's words it can be concluded that he intended to report in relation to events that could have a material impact on the company. In my view, in light of the exchange in the minutes, there is a difficulty in determining the meanings that can be attributed to them. However, the determination that the discussion did not indicate that any incident of violation would require immediate reporting is reasonable in the circumstances of the case. I will recall that at the time of the said board meeting, the violation had not yet occurred, and in any case its circumstances were unknown. Kastiel and Dekel Shafrir also referred to the statement of the second lawyer who was present at the meeting on February 3, 2019, according to which the company should have reported non-compliance with the terms of the loan when it became aware of it. They ruled that in the circumstances of the case, it was not clear that he had all the information required when his words were made (paragraphs 12-13 of their decision).