According to the defendants, only a material change in the pore figure could have established a reporting obligation. Such a figure would exist only where the original figure was such that it allowed for economic oil production and the new figure did not, or if the original figure was supposed to lead to a conclusion regarding the transition to production tests while the new figure did not lead to this conclusion.
In our case, it was argued that after examining the totality of the data, the recommendation of all the experts hired for drilling consulting was that the production tests should be continued. The most important decision for the reasonable investor, and the "bottom line" of the experts' advice, was to conduct the production tests. Shemen reported this conclusion, and this is important positive news that is not taken for granted. The defendants reject the claim that prior to the production tests, the defendants knew that there was no chance of the existence of extractable oil, as well as the claim that "serious problems" were discovered in the drilling that were hidden by the defendants from the public. The decision to proceed with production tests is the essential event and was made with the opinion of all the experts who professionally considered all the data. In contrast, a certain change in the pore data does not affect the corporation's affairs in a material way, and it could not affect the decisions of a reasonable investor. Incidentally, the defendants noted that her partner in the drilling also reported the same.
- The defendants supported their arguments that this was also the position of the Israel Securities Authority that was filed in the petition filed by Halfon against its decision not to finance Halfon's application (Appendix 8 to the statement of defense), after consulting with an expert in the field. It was argued that even according to the ISA's position, the porosity figure is not a figure that should have been disclosed by virtue of the Eleventh Addendum; Pore rate is a material figure that requires reporting only where it influences the decision to perform production tests; And which in itself does not influence the decision of a reasonable investor.
- The defendants also addressed concrete allegations regarding the defendants' statements at the board meetings. As stated, the plaintiff claimed that Ashkenazi's statement that some of the data obtained from the electrical logs tests was problematic was referring to the significance of the rock data that was obtained. According to the defendants, in this regard, Ashkenazi's explanation that he referred to the quality of the results in the electrical logs tests should be accepted because of technical difficulties that existed in the test, and not to the significance of the data. The defendants further added that in any event, it was not stated in the meetings of the board of directors that there was a material change in the pore data or that there was a problem in this aspect. The defendants and their partners did not consider the pore data obtained in the tests to be a material figure in light of the totality of the data, including the thickness of the layer and the possibility of cracking, which created optimism. Incidentally, the defendants claimed that in the statement of claim, statements from the board of directors were quoted, as it were, but in a truncated and misleading manner that creates an erroneous picture before the court (in this regard, N/1 was also presented).
- It was argued that even the updated resource report published on March 26, 2014, after the report of the cessation of the production tests, does not support the plaintiff's claim that the pore rates constituted a "significant difference" even in Shemen's own eyes. This is because the report refers to a number of parameters and should not be seen as a statement that each of them, in and of itself, is a significant figure. Of all the data, the pore figure is the smallest and the least significant. It was also emphasized that the report was published in accordance with the provisions of the law, which require it.
- It was further argued that even if it was determined that Shemen should have reported the pore rates found in the electrical log test, the plaintiff did not have a cause of action because he did not show a causal connection between the lack of information about the pore rate and his investment decision. The information that the plaintiff claims is missing in the report is information about the pore rates. Therefore, he should have argued that if Shemen had reported the discovery of significant oil marks and the decision to move to production tests, and in addition to these positive statements, she would have also added the percentage of pores found in the electrical logs tests and the difference between it and the one previously evaluated, it would not have purchased the shares. In addition, the plaintiff testified that he had only read articles in the newspapers, and it is impossible to know that the more data about the pore rates had been added, the more he would have found his way to those articles. The plaintiff also clarified that he is not an expert in the field of oil drilling, and therefore there is no reason to assume that he would have known how to attribute to the rate of pores a different meaning than that attributed to it by the experts who recommended a transition to production tests. After all, if Shemen had added this figure to the report as well, it is reasonable to assume that she would have also clarified that these data were taken into the experts' recommendation. Therefore, there is no reason to assume that the publication of this figure would have led the plaintiff to absolutely refrain from purchasing oil shares. In any event, the plaintiff did not meet the burden of persuasion imposed on him. It was further argued that the plaintiff did not estimate and did not present a calculation for his alleged damage in accordance with the calculation according to the "value line" method as opposed to the "share line" method in accordance with the precedent established in other municipal applications 345/03 Reichert v. Heirs of the late Shemesh z"l, IsrSC 62(2) 437 (2007).
- The defendants also addressed the allegations regarding the use of insider information by Levy and Ashkenazi, and claimed that it was proven that they acted on the advice of their lawyer after he spoke with representatives of the Authority, and therefore allowed their options to expire. As for the plaintiff's claim that their claim of a conversation with representatives of the Israel Securities Authority was not proven, it was argued that the request was made by Adv. Ahdut, and that the plaintiff was entitled to summon her to testify as much as he wished. It was the plaintiff who requested that the interrogations and testimonies of the defendants and Adv. Meiri that were submitted in the framework of Halfon's request be submitted as evidence in this proceeding, and they agreed to this. In the framework of these affidavits, which were known to the plaintiff's counsel, the defendants' claim regarding the application to the Securities Authority, and who spoke with its representatives, was presented. Moreover, later on, the plaintiff was even allowed to summon the witnesses for supplementary interrogations. Hence, insofar as the plaintiff sought to substantiate claims regarding the attorneys' application to the Securities Authority, he could and was entitled to do so. In any event, there is no basis for the plaintiff's claims that the defendants should have done so, and their refusal works against them. The defendants clarified that the only relevant application to the ISA is that relating to the exercise of the options of Levy and Ashkenazi, another application that was discussed in other proceedings, does not relate to our case.
- According to the defendants, the opening of the personal proceeding at the same time as the motion for certification stems from the improper motives of Adv. Halfon, who does not accept the final determinations of the court, which approved the motion to certify the class action that he filed but determined that it was not suitable to represent her. In their summaries, they also complained about the plaintiff's method of pleading, in which he presented partial and misleading quotes and even lashed out, without basis, from Levy and Ashkenazi.
C.4. The plaintiff's arguments in response to the defendants' summaries
- In the summaries of the reply, the plaintiff referred to the defendants' claim that the statement regarding the "finding of significant oil marks" is a statement based on law. According to him, alongside this statement, the defendants should have provided the material information about the problematic nature of the drilling. They should have reported that the electrical logs checks revealed serious problems with the drilling and that Delek Energy, which examined the data, announced that it was not interested in purchasing the rights. It should be noted that elsewhere in his summaries, the plaintiff claimed that the report of the discovery of significant oil marks was a "pompous" statement that the defendants published knowing that it was not true and that they had confidential information, hidden from the public, that presented problems in the drilling (paragraph 49 of the summaries).
The plaintiff also addressed the argument that the law does not require reporting of the pores that were discovered, and argued that this was material information that the defendants should have reported, as determined in the decision in the Halfon application as well as in the decision in the request for approval by the purchasers of the shares. It was further claimed that the defendants compared the data to those of the "Yam 2" drilling, and this figure was also hidden from the investors. If the plaintiff had known these figures, he would have been able to make an informed decision and would not have purchased Shemen's shares.