CIVIL LIABILITY FOR THE CONTENTS OF THE PROSPECTUS IN THE LIGHT OF THE NEW ISRAELI SECURITIES LAW

AuthorJoseph H. Gross
Published date01 November 1973
DOIhttp://doi.org/10.1111/j.1468-2230.1973.tb01389.x
Date01 November 1973
CIVIL LIABILITY FOR THE CONTENTS OF
THE PROSPECTUS IN THE LIGHT
OF
THE
NEW ISRAELI SECURITIES LAW
1.
INTRODUCTION
BRINGING the Securities Act of
1988
before Congress, President
Roosevelt gave the following message
:
There is, however, an obligation upon us to insist that every
issue of new securities to be sold in interstate commerce shall
be accompanied by full publicity and information, and that no
essentially important element attending the issue shall be con-
cealed from the buying public.
This proposal adds to the ancient rule of caveat emptor the
further doctrine
let the seller also beware.’
It
puts the burden
of telling the whole truth on the seller.
It
should give impetus
to honest dealing in securities and thereby bring back public
confidence.”
While in theory there is not much difference between English
philosophy regarding securities law and the American view, in
practice these two systems differ in many respects.2
The American model was followed recently by the Israeli legis-
lature while enacting the Securities Law
196LL3
Israel’s company
law is still based
on
the English Companies Act of
1929,
and on
English common law.
The Securities Law is Israel’s first modern statute dealing with
company matters and contains many aspects not dealt with in detail
here.
The fifth chapter of the Law provides civil and criminal remedies
in any event where false particulars appear in the prospectus which
offers securities to the public.
The Law extends the compass of these remedies considerably
and there is a sharp contrast to the previous state
of
the law-with
some equation of civil and criminal standards of responsibility.
The existence of a
misleading particular
in the prospectus
places
a
civil liability on the company, its directors, underwriters
1
H.R.Rep.
No.
85,
at 1-2, 73rd Cong. 1st
Sess.
(1933).
2
Cf.
Evidence before the Jenkins Committee, 19th day (March
23,
1961);
L.
C.
B.
Gower,
Some
Cont,rasts between British and American Corporation Law,”
(1956) 69
1-Iarv.L.Rev.
1369.
3
Passed by the Israel parliament on August
14,
1968, and published in
Sefer
Ha-Chukim
No.
541
!hereinafter the Law).
4
s.
31
of
the
Law
:
A
person who has signed
8
prospectus under section
29
is
liable to
a
person
who
acquires securities from the offeror in accordance
wit.h
the prospectus for damage caused by the fact that the prospectus contains
n
misleading particular.”
600

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