In the case of the High Court of Justice 1715/97 Investment Managers Association v. Minister of Finance, IsrSC 51(4) 367 (1997), the Supreme Court noted the purposes of the Advisory Law and noted that the law is intended to ensure the provision of investment portfolio management services by competent entities with an appropriate professional level, as well as to provide protection to the investing public, while increasing their participation in the capital market. The following are the following (pp. 390-391):
"The purpose underlying the Investment Portfolios Law was to regulate the practice of portfolio management (and investment advice - a matter that we do not face). The need to regulate this field stems from the great development that has taken place in recent years in the capital market in Israel. This development has led to a multitude of investment options open to investors and their growing interest in this field. A situation has been created in which the investing public is increasingly in need of guidance and advice, while transferring the management of investment portfolios to an expert. The lack of an arrangement created a reality in which entities that did not meet the minimum requirements of suitability and competence operated in the field of investment portfolio management. The lack of a licensing system has led to the fact that even if an investment portfolio manager fails in his position, he can continue it without interruption [...]. The purpose of the law is to ensure that the investment portfolio management service will be reliable and aimed at benefiting the client. The purpose of the law is to ensure that the service of managing investment portfolios is provided by a qualified entity with an appropriate level of education and professionalism. The legislation is also intended to protect, among other things, a public of 'unsophisticated' investors who place their trust in portfolio managers. The protection of the interests of investors is also intended to increase their participation in the capital market, whose size and strength are in the economic interest of the state.".
- The offenses attributed to the defendant are under section 39 of the Counseling Law, which opens chapter 8 of the law, which deals with penalties and defines as a criminal offense a violation of some of the statutes set forth in the Counseling Law itself. Section 39 has a level of severity: Section 39(a) prescribes a penalty of two years' imprisonment or a fine five times the fine prescribed in Section 61(a)(3) of the Penal Law for the violations specified therein, while Section 39(b) prescribes a sentence of one year's imprisonment or a fine five times the fine prescribed in Section 61(a)(2) of the Penal Law (and in the case of a double fine corporation) for less serious offenses. The defendant is charged with an offense under section 39(a)(1) and an offense under section 39(b)(12) of the Counseling Law.
- Section 39(a)(1) of the Advisory Law relates to a person who "engaged in investment advice, investment marketing or investment portfolio management, without holding a license, in contravention of the provisions of section 2(a) to (b1)".
Section 2(b) of the Law, which is relevant to our case, states as follows: