Levy's statement regarding the inability to assess the significance of the pore figure reflects the defendants' position even today, according to which the weight of the porosity figure in the overall assessment of commercial production capacity depends on the rate of cracking of the rock that could "compensate" for it, and which was unknown at the time.
Indeed, as detailed above, the magnitude of the change in the pore figure, in and of itself, has not been proven in this proceeding, and I accept the position that it can also affect the materiality of the information from the perspective of a reasonable investor. In this context, it should be noted that the company's board of directors increased the porosity figure, but not the change in it compared to the previous assessment. However, as detailed above, the first resource report, the current resource report, and the minutes of the Operations Committee and the Board of Directors conclude that the pore rate was a significant component in the evaluation of the reservoir. Levy's affidavit is not enough to change this conclusion that emerges from Shemen's documents. In my opinion, this is sufficient to lead to the conclusion that a change in this figure, and certainly where the pores are the "bad" part of the totality of the data, is a fact that should have been reported to the public. Even given the defendants' view that this is a kind of "equation" whose components have an impact on each other, in relation to this figure in the equation it was already known that its values were lower than expected.
This position is consistent with the rule that in order for information to be considered material for a reasonable investor, it is not required to prove that it is crucial information, nor did it lead to a change in the investor's decision. The concept of proper disclosure accepted in case law is that according to which information is material where it is a matter of facts whose knowledge is likely to bring about a significant change in the picture of the data that a reasonable investor faces when he comes to make a decision regarding the purchase or sale of a security. Accordingly, it was determined that even where the facts detailed in the report are correct on their merits, but the totality of the data does not reflect the full picture, it should be said that this is a report that includes a misleading detail (Class Action (Tel Aviv District) 42654-12-16 Gaon v. N.R. Spuntech Industries Ltd., paragraphs 186-188 [Nevo] (February 10, 2019); Class Action (Tel Aviv District) 29520-03-13 Litecom (Israel in Tax Appeal v. Habas Investments (1960) Ltd., paragraphs 75, 84 [Nevo] (July 19, 2015)). As I noted above, in our case, the report to the public did not present the full picture that the board had before the board on the basis of which its decisions were made, and it included only the positive part of the totality of the data. In any event, since I have determined that the defendants were obligated to report the change in the pore figure by virtue of the duty to update and amend, the aforesaid is more than necessary.
- The situation is different with respect to the correction figure, which, according to the plaintiff, should also have been included in the report. As stated, I did not accept his factual claim that prior to the publication of the report, the defendants knew that the cracking figure would not be able to compensate for the pore figure. From the evidence presented to me, it appears that the figure of the cracking was unknown, while it was clarified that an up-to-date figure would be clarified only when the decoding was completed. The "bottom line" of the company's expert was that only after a final decoding "will we be able to know if there are fractures or not". I cannot accept the argument that the defendants should have included in the report a statement regarding the lack of up-to-date data regarding the cracking and that this will become clear only after the completion of the decipherment, which will take months. As I noted above, even flooding investors with information that does not contribute to their decision undermines the purpose of the disclosure principle.
6.6 Reference to the ISA's position
- The defendants claim that in all of the considerations, it is appropriate to cite the position of the Israel Securities Authority that there was no room to include the data regarding pore rates in the report dated September 8, 2013. This position was submitted about ten years ago in the framework of the Administrative Petition (Tel Aviv District) 48344-07-14 Halfon v. Israel Securities Authority [Nevo] (Appendix 8 to the statement of defense, hereinafter: The Securities Authority's Position). I examined the position of the Israel Securities Authority that was attached to the statement of defense, but I did not find that it could change my conclusion that the defendants should have included this figure in the report.
First, as stated, the position of the Israel Securities Authority was not requested in the proceeding before me, nor was it given in the framework thereof. It was given as part of its response to an administrative petition filed against its decision not to exercise its authority under Article 209 to the Companies Law, 5759-1999 and not to bear the petitioner's expenses regarding the approval of a swap request. Although in this framework the Authority's position with respect to the chances of the application for approval was detailed, the question of the reasonableness of its decision not to grant the application was based on the question of reasonableness.