The Israel Securities Authority recently published a draft bill to amend the Securities Law. The amendment would give the ISA the power to investigate related offenses committed in addition to securities offenses. Under the bill, the ISA may manage and lead flagship cases, including those related to fraud, bribery, money laundering, and cryptocurrencies (which the ISA considers securities). If passed, the amended law will have far-reaching consequences on the ISA as an investigative agency.

Core Offenses

Currently, to investigate suspicions of related offenses that are not classified as core offenses under the law, the ISA must obtain special authorization from the Minister of Justice for each case. The ISA may only investigate other offenses, such as bribery, fraudulent receipt, breach of trust, false records in corporate documents, etc., when there is a reasonable suspicion of one of the core offenses under the law. These core offenses include reporting offenses, fraud, and insider trading.

This lengthy authorization process encumbers and compromises the investigation, according to the ISA. Notably, the timing of an investigation can affect how it unfolds and its consequences.

Between the Police and the Israel Securities Authority

In the ISA’s opinion, the lack of automatic authority to investigate violations related to securities offenses compromises an investigation’s effectiveness and power of deterrence. The lack of authority might also lead to duplicate investigations by different investigative entities.

A well-known example is Case 4000, the “Bezeq-Walla Case.” This case begot one of the indictments against former Prime Minister Benjamin Netanyahu. In that case, there was a media dispute between the Israel Police and the ISA regarding jurisdiction over the case. Ultimately, the police led the investigation.

The ISA’s draft bill will improve the situation, from its point of view. The ISA will have the automatic authority to investigate offenses related to securities offenses, such as theft by authorized persons, forgery, acting as a bribery intermediary, conspiracy to commit a crime, and offenses under the Computer Law.

If the Knesset passes the bill, the law might have dramatic consequences on enforcement in Israel. The ISA has substantial resources, expertise, and a proactive agenda to increase its influence as a regulator. As a result, the ISA might become a very dominant investigative entity of economic crimes, corruption offenses, cybercrime, and crypto-sphere crimes.