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Securities Offenses and Insider Trading
The main offenses under the Securities Law
The Securities Law establishes three main categories of offenses, with the penalty for the most serious among them reaching up to 5 years of imprisonment and heavy fines: Insider trading: carrying out a transaction in a company's security by an insider, or by someone who received information from him, while in possession of material information that has not been made public; securities fraud: influencing security prices by fraudulent means, including "stock ramping" and trading manipulations; and misleading details: including a misleading detail in a prospectus, in reports, or in the company's filings. Alongside the criminal track, there is also an administrative enforcement track, which is faster, with monetary sanctions and bars on serving in office.
Who is exposed?
Not only "tycoons": officers, directors, finance employees, accountants, lawyers, consultants, and also family members and friends who received a "tip." A hallway conversation about a deal taking shape that led to the purchase of shares before the notice to the stock exchange is enough to open an investigation. The Securities Authority monitors unusual trading patterns by computerized means, and arrives at the investigation already holding the trading data, correspondence, and location data.
Lines of defense
Was the information really "material" and "inside"? Was the transaction carried out on the basis of the information or for documented independent considerations? Did the person being questioned know of the information at the time of the transaction at all? These are questions whose resolution is evidentiary and subtle, and this is precisely where cases are decided. A version given to the Authority without preparation permanently closes off defense options.
Legal representation
Israel Arama, formerly of the Tel Aviv District Attorney's Office, represents suspects and defendants in securities offenses, in both criminal and administrative proceedings. Contact for an initial consultation without obligation immediately upon receiving the summons.
Investigations by the Securities, Competition and Tax Authorities
Investigative Regulators: Not Just the Police
Alongside the Israel Police, economic enforcement authorities operate in Israel with full criminal investigative powers: the Israel Securities Authority, which investigates trading, insider information, and reporting offenses; the Competition Authority (formerly the Antitrust Authority), which investigates restrictive arrangements, bid rigging, and cartels, offenses punishable by up to 3 years of imprisonment and in aggravated circumstances up to 5; and the Tax Authority with its various divisions. These authorities have investigators, powers of search, seizure, detention, and arrest, and they transfer cases directly to the prosecution.
The Unique Characteristics of Regulatory Investigations
The investigations are planned months in advance and begin with an "investigation morning": a coordinated raid on offices and homes, seizure of servers and phones, and the parallel summoning of dozens of involved persons in order to prevent coordination. Those being questioned are often managers and businesspeople with no prior record, who suddenly find themselves under caution, subject to a prohibition on leaving the country, and freezes. A typical mistake: the assumption that "this is a regulatory matter, not a criminal one." This is a criminal investigation in every respect, and every word is documented.
Proper Preparation
The right to consult applies in full in these investigations as well: no version should be given before consultation. At the same time, the company's interfaces must be managed properly: separation between representation of the company and representation of officeholders (the interests are not identical), instructions to employees, and strict compliance with the prohibition on obstruction—do not delete, coordinate, or "update" involved persons. Later on, there are also unique resolution tracks: administrative enforcement, conditional arrangements, and ransom.
Legal representation
Israel Arama, formerly of the Tel Aviv District Attorney's Office, accompanies managers, controlling shareholders, and employees in investigations by the economic authorities, from the moment of the raid until the case is closed. In the event of a raid or summons, contact immediately, before the first investigation.
The main offenses under the Securities Law — what is important to know?
The Securities Law establishes three main categories of offenses, with the penalty for the most serious among them reaching up to 5 years of imprisonment and heavy fines: Insider trading: carrying out a transaction in a company's security by an insider, or by someone who received information from him, while in possession of material information that has not been made public; securities fraud: influencing security prices by fraudulent means, including "stock ramping" and trading manipulations; and misleading details: including a misleading detail in a prospectus, in reports, or in the company's filings. Alongside the criminal track, there is also an administrative enforcement track, which is faster, with monetary sanctions and bars on serving in office.
Lines of defense — what is important to know?
Was the information really "material" and "inside"? Was the transaction carried out on the basis of the information or for documented independent considerations? Did the person being questioned know of the information at the time of the transaction at all? These are questions whose resolution is evidentiary and subtle, and this is precisely where cases are decided. A version given to the Authority without preparation permanently closes off defense options.
Investigative Regulators: Not Just the Police — What Is Important to Know?
Alongside the Israel Police, economic enforcement authorities operate in Israel with full criminal investigative powers: the Israel Securities Authority, which investigates trading, insider information, and reporting offenses; the Competition Authority (formerly the Antitrust Authority), which investigates restrictive arrangements, bid rigging, and cartels, offenses punishable by up to 3 years of imprisonment and in aggravated circumstances up to 5; and the Tax Authority with its various divisions. These authorities have investigators, powers of search, seizure, detention, and arrest, and they transfer cases directly to the prosecution.
Proper Preparation — What Is Important to Know?
The right to consult applies in full in these investigations as well: no version should be given before consultation. At the same time, the company's interfaces must be managed properly: separation between representation of the company and representation of officeholders (the interests are not identical), instructions to employees, and strict compliance with the prohibition on obstruction—do not delete, coordinate, or "update" involved persons. Later on, there are also unique resolution tracks: administrative enforcement, conditional arrangements, and ransom.
This information is for initial orientation about the service and contact process. It is not individual legal advice.
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