A public company engaged in oil drilling reported to the stock exchange the discovery of oil marks, but omitted from the report information relevant to the economics of the production, even though it had it and which it is obligated to publish under the Securities Law.
The Court rejected the plaintiff's contention due to the lack of a causal connection between the misleading report and the damage caused to the plaintiff. The Israeli Securities Law is based on the principle of "proper disclosure" and the centrality of the disclosure principle stems from the information gaps between the company, which holds the information, and the general public, to which it is not exposed. The prohibition on including misleading details in reports submitted in accordance with the law is a complementary aspect of the disclosure duty. Deception can also be expressed by way of omission, i.e., by refraining from providing relevant data, and not only by providing incorrect details. A claim for securities deception is of a tortious nature, and in order for liability to arise due to a misleading detail, the plaintiff must prove the existence of a misleading detail, damage, and a causal connection between the misleading individual and the damage. Here, along with significant oil indications, it was also revealed that the cost-effectiveness of the production was lower than previously reported, but despite this, and despite the explicit requirement in the law, the company did not publish this figure, and therefore it is a misleading report. However, the plaintiff did not prove a causal connection between the incomplete and misleading report and his loss-making investment, and therefore he is not entitled to compensation.