The plaintiff also did not establish entitlement to restitution relief by virtue of Article 35 to the Securities Law, if only for the reason that he did not purchase his shares as part of a prospectus. Nor did he prove that if the misleading detail had been revealed, the value of the shares would have been equal to zero.
Therefore, in the circumstances of the case, the plaintiff's argument that he is entitled to compensation in the full amount of his investment in the company's shares cannot be accepted. Since the plaintiff did not prove a causal connection between the loss of his investment and the misleading individual, and since he did not claim and in any case did not establish any other claim for damage, I cannot accept his claim by virtue of the Securities Law.
F.9 The question of reliance on misleading representation
- The defendants also raised arguments regarding the plaintiff's reliance on the alleged misleading representation. It was argued that the plaintiff relied on reading newspapers but did not present the article he had read, and it was not proven that if he had been given the pores he would have found his way into the newspapers. Hence, according to the defendants, the plaintiff did not prove that he relied on the misleading detail.
- In light of my conclusion above that the plaintiff did not prove a causal connection between the misleading individual and the loss of his investment, I do not see fit to expand on this matter, even though the defendants' argument in this context is difficult. I will mention that it is well known that where liability is claimed for a misleading detail in the report by virtue of the Securities Law, the plaintiff is not required to prove that he actually relied on the misleading detail (Civil Appeal Authority 8268/96 Reichert v. Shemesh, IsrSC 55(5) 276, paragraph 25 of the judgment of the Honorable Justice T. Strasberg-Cohen [Nevo] (2001) (hereinafter: The Reichert case (the reliance)); Class Action (Tel Aviv District) 67187-11-18 Rahav v. Dankner, paragraph 65 [Nevo] (May 5, 2021) (hereinafter: The Rahav Matter); Class Action (Tel Aviv District) 59659-02-20 Rice v. Hagshama Fund Ltd., paragraphs 36-39 [Nevo] (April 20, 2021) (hereinafter: The Rice Matter); Class Action (Tel Aviv District) 13948-08-15 Nachmani v. Oil and Gas Resources Ltd., paragraph 155 [Nevo] (May 24, 2021); Yamin Wasserman, p. 339; Leah Paserman-Josefov, pp. 502-504). I will also mention that even with respect to causes outside ofSecurities Law, in which reliance is the component of the tort, ways have been proposed to deal with this requirement and to make it more flexible (Reichert regarding reliance, paragraphs 28-31; The Rahav Matterparagraphs 65-66). As stated, in view of my conclusion above, I am not required to elaborate on this matter.
- Has the tort of negligence been proven?
- In our case, the plaintiff also argued for the applicability of the tort of negligence by virtue of Article 35 to the Torts Ordinance. This argument was intertwined with his arguments, even though no orderly argument was presented with respect to the duty of care, its breach, and the other elements of the tort. What emerges from the plaintiff's arguments is that the alleged elements of the tort of negligence coincide with his claims on the ground of Securities Law - The components of the acts attributed to the defendants as well as the component of the damage (paragraph 8 of the plaintiff's summaries).
According to the approach of the learned Tzipora Cohen, the cause of action by virtue of Securities Law It comes to be lenient with the injured party, and does not negate the right to sue for damages (Tzipora Cohen, pp. 155-166). Thus, for example, the duty of care of directors towards the purchasers of shares was recognized for a negligent detail in the financial statements (Civil Case (Tel Aviv District) 2189/85 Illin v. Rotenberg, IsrSC 5755 (3) 23, 37 (1995). Even assuming that the plaintiff has the possibility of suing on the grounds of negligence as well, he is required to establish it. Therefore, he must prove, beyond the elements of the cause of action according to Securities Law, also the breach of the duty of care towards him, the expectation that the plaintiff will rely on the negligent representation and the existence of actual reliance (taking into account the aforesaid in relation to the flexibility of this requirement).