Arguments for Dismissing the Petition in Limine
Lorenzi's arguments for dismissing the petition in limine
- Lorenzi argues that the petition should be dismissed out of hand, for four reasons.
- First, that the authority is not entitled to appeal against a decision of the committee. Lorenzi justified this position for a number of reasons.
- It was argued that this is the linguistic conclusion from the relevant provisions of the law, and that the classification of the proceeding as an administrative petition is sufficient to support the conclusion that the authority cannot begin the proceeding, since an administrative petition is a tool that enables an individual to attack a decision of an administrative authority.
- It was further argued that during the legislative process of the amendment to the Securities Law, the possibility that the ISA could file a petition against the committee's decision did not arise. Moreover, in the framework of these discussions, the importance of granting the violator the right of appeal was emphasized in order to bring the decision under judicial review and thus to balance the power of the authority. It was argued that the administrative enforcement procedure prescribed in the law is not "balanced" since the Authority was given significant tools to influence it. Granting the right of petition to the authority will be undermined with the intention of balancing the power given to it in the framework of the amendment to the law. Lorenzi also notes that the Israel Securities Authority has additional mechanisms that allow it to address the decision of the Administrative Enforcement Committee's panels instead of a petition to the court. Thus, for example, the possibility of issuing a notice to the public that includes its legal position in relation to the said interpretation.
- In Lorenzi's view, the enforcement committee is in fact part of the authority's enforcement mechanism. This, inter alia, is in view of the powers of the chairman of the authority to appoint and extend the term of office of the chairman of the panel and the functional proximity of the committee to the authority. It was argued that in these circumstances, granting the ISA the right to petition against the committee's decision is tantamount to the right to appeal its decision, and it also raises a real concern of creating increased dependence on the ISA and harming the independence of the panel's chairmen.
It was further argued that granting the right to petition the authority would lead to the complexity of the proceedings and to the extension of the time between the commission of the violation and the imposition of the penalty for it. This is contrary to the purpose of the legislation, which was an efficient and speedy process.
- A second reason for dismissing the petition in limine is that it was filed without authority. Lorenzi argues that even if the authority has the right to appeal against the committee's decisions, the authority to order the filing of a petition is vested exclusively in the chairman of the authority, who has all the powers relating to the enforcement process. However, at the time it was submitted, there was no sitting chairman of the authority, and therefore there was no authority authorized to submit it. Lorenzi notes that in response to his inquiry on the matter, the ISA replied that in the absence of an incumbent ISA chairman, the decision to file the petition was made by a "joint management team" composed of the ISA's CEO, its legal advisor, and the ISA's senior advisor. According to Lorenzi, this body did not have the authority to file a petition, and hence it was filed without authority.
- A third reason for rejecting the petition out of hand is that the petitioner did not attach the relevant documents, in contrast to Regulation 5(d) to the Administrative Courts Regulations (Procedures), 5761-2000. This regulation requires that photocopies of all documents relating to the matter be attached, inter alia, to the petition.
In our case, the Authority only attached the decision of the Committee Panel, the Administrative Statement of Arguments that was submitted, and the Authority's notice of the submission of its position regarding the enforcement measures in the case, including the argument submitted on its behalf in this matter. The Authority did not attach the documents that substantiate its claim of administrative violations, nor did it attach the documents to which it referred in its petition. It was argued that in these circumstances, even if the Authority's arguments in the petition are accepted, it will not be possible to hold Lorenzi responsible for the violation. This was in the absence of documents and given that the committee did not discuss all the components of the alleged violation, after determining that there was no reporting obligation.
- The Fourth Reason for Dismissing the Petition in Limine is the multiplication, in a manner contrary to the law, of factual claims that were not mentioned in the framework of the administrative proceeding, the purpose of which is to create a negative impression in relation to the respondent.
The Petitioner's Response to the Threshold Arguments Raised by Lorenzi
- Regarding the right of the Israel Securities Authority to appeal against the decision of the Enforcement Committee, the ISA referred to a decision given in AP (Tel Aviv District) 27448-02-22 Chairman of the Israel Securities Authority v. Edri El Israel Properties Ltd. (December 4, 2022) (hereinafter: the case Edri El). She also noted that in practice, petitions by the Authority against the decisions of the Administrative Enforcement Committee were discussed, and it can be assumed that if the court had believed that there were impediments on the part of the Authority to conduct such a petition, it would have raised it on its own initiative.
- It was argued that the right of standing to attack an administrative decision is broad, since it is a basic right, and that it is available to any party who is liable to be harmed by the decision of the administrative authority or has an interest in the decision. Admittedly, the prevailing approach in "regular" petitions is that the respondent in the petition is the authority that made the decision, and insofar as there is a party that will be harmed by it. However, this does not negate the right of standing of an administrative authority insofar as it is liable to be harmed by the decision.
The denial of the right of access to the courts will only be done on weighty grounds that support the denial of this basic right. If the legislature wanted to prohibit the authority from filing an administrative petition, the right to which it is determined by law, it would have done so explicitly and in legislation. According to the Authority, an examination of the legislative acts that regulated the establishment of the committee and the ways in which its decision was attacked shows that there is no mention of its right to attack the committee's decision. Section 52A of the Securities Law, which establishes the right to appeal, does not limit the identity of the petitioner. Lorenzi's interpretive arguments to sections 52A and 52na are rejected by the Authority mainly on the grounds that this is a technical and formal argument. This, while examining the nature of the decisive administrative proceeding between two parties requires granting both parties the right to appeal.
- In this context, it was argued that the right to appeal the committee's decision arises from the nature of the proceeding as determined in the case law. First, this is an administrative enforcement proceeding, and not a "regular" administrative proceeding. An enforcement proceeding is initiated by the administrative authority, and not by a private entity requesting the authority to exercise one authority or another. Second, the Enforcement Committee is a quasi-judicial tribunal and not a "regular" administrative authority. The decision in the dispute between the "person" and the "relevant authority" (the Securities Authority) was taken out of the hands of the Authority and transferred to a quasi-judicial tribunal. The proceeding before it consists of a "tripartite" mechanism in which two parties appear before the tribunal, a "person" on one side and an "authority" on the other. Although the administrative tribunal is not a court, it is also not the "authority" with which the "individual" has a dispute, but rather a quasi-judicial body before which the dispute is arbitrated. Third, it is a procedure that replaces a criminal proceeding, or more precisely, a criminal proceeding before a court that has been "transferred" to an administrative proceeding before an administrative tribunal. The hearings that take place are adversarial – evidence is submitted, the arguments of the parties are heard, the rights of the violators are preserved, and more. All of these, with the necessary changes, bring the proceedings before the Administrative Enforcement Tribunal closer to a legal enforcement proceeding, such as a criminal proceeding.
- The Authority is of the opinion that just as it would not be possible to accept a position according to which in the framework of a criminal proceeding the right of appeal is granted only to one party, so too it is not possible to recognize such a situation in the framework of an enforcement proceeding before the Administrative Enforcement Tribunal. There is no basis for the argument that by way of silence the legislature deprived the ISA of a basic right such as the right of appeal, all the more so where the mechanism for appealing the decision was expressly determined. To this, it should be added that the mechanism of objection set forth in the law is unique in the sense that alongside the determination that it is an administrative petition, it was determined that the court may approve, reject and even change the panel's decision. Hence, it is not possible to accept Lorenzi's argument that the role of the court in the framework of an administrative petition is only to protect the infringer, since the role of the court is also to improve the panel's decisions, inter alia in order to protect the interests of the investing public. Hence the importance of the authority's ability to appeal the decision of the Administrative Enforcement Panel.
- It was further argued that there is no basis for Lorenzi's position that the Authority and the Administrative Enforcement Committee are one and the same. The design of the administrative committee as an administrative tribunal means a disconnect between the authority, which is a party to the administrative proceeding, and the enforcement committee, which decides on the administrative enforcement proceedings brought before it. The independence of the Enforcement Committee is enshrined in the Securities Law, and is maintained in practice.
- The Authority also wishes to reject Lorenzi's argument that since the petition was not filed by the Authority's chairman (since there was no sitting chairman at the time of its filing), it was filed without authority. The Authority notes that Securities Law assigns concrete powers to the chairman of the authority within the framework of the administrative proceeding as well, but filing a petition is not one of them. Therefore, there is no impediment to another relevant entity in the Authority making a decision on its submission. The Authority's counsel further noted that when a new chairman was appointed to the Authority, he ratified the petition, and if there was a technical and minor flaw in the proceeding, it lost its importance.
- With regard to the attachment of the documents, it was argued that this was done in light of the fact that in the framework of an administrative petition, the court does not examine each of the panel's conclusions "appellantly". The Petitioner insisted that the petition includes references to documents, without attaching them, in order to clarify that the matter is supported by the evidence presented to the panel. These documents are also in Lorenzi's possession. In any event, it is clear that insofar as the court is interested in reviewing the document, it can order its submission, and it is also understood that to the extent that the permission should have attached documents, this can be easily corrected. The Petitioner clarified that insofar as the court deems it appropriate does not object to the submission of all the documents.
- As to the argument that the Petitioner added facts relating to Lorenzi whose purpose was to create a negative "atmosphere" against him, it was argued that a single paragraph does not justify dismissing the petition in limine. In any event, this is not new evidence, but rather a statement regarding the respondent's conduct, and no facts were added relating to the decision being attacked.
The parties' arguments regarding the summary dismissal in the framework of the hearing
- The Authority's counsel reiterated the arguments raised in response to the presumptive claims. With regard to the claim that there was no sitting chairman of the Authority at the time the petition was filed, he clarified that it does not stand by the claim of "ratification" retroactively, which is not substantive in its view, The other reasons are sufficient to reject the respondents' argument in this context.
- Lorenzi's counsel argued that the Authority's position that the committee is a quasi-judicial tribunal should not be accepted. In her view, if there were one, it would have to be independent and independent, whereas in reality this body carries out the procedure for the authority. She added that in order for the Authority to have the right to appeal against the committee's decision, it had to be explicitly stated. She further argued that support for her position can be found in the fact that this is a petition and not an appeal, since the purpose of a petition is to enable the individual to petition against the administrative body.
- As for the filing of the petition when there was no sitting chairman of the authority, it was argued that this was invalid. It was argued that the basis for the authorization of the "Joint Management Team" to file a petition on behalf of the Authority was not clarified. It was further argued that the retroactive ratification by the current chairman of the authority is a "trick" that does not correct the lack of authority in filing the petition or the "circumvention" of the timetables in which a petition must be filed against the committee's decision. With regard to the other arguments for summary dismissal, counsel for the respondent reiterated her written arguments.
The parties' arguments on the merits of the petition