The main change was in the powers granted to the ISA to open investigative procedures and administrative enquiries at its own initiative, in an enforcement process handled by the Administrative Enforcement Committee, and the authority to impose enforcement sanctions on corporations and individuals, some of them very severe, and in various instances on violating the instructions of the Securities Law, in a fast-track and public procedure.

The procedure is designed to combat serious securities offenses that are not criminal and are in addition to the enforcement procedures that existed in the past: the criminal procedure that was designed for the most serious offenses in the law, and the procedure for imposing financial sanctions in the hands of the ISA which were designed for minor violations.

The Committee has been given five means of enforcement: imposing financial sanctions, payment to those harmed by an offense, prohibiting holding office, cancelling a license and instructions on implementing actions to correct an offence.

These enforcement means are severe and deterrents in terms of quality, scale and results particularly if paying attention to the fact that the amount of sanctions can reach NIS 5 million for a corporation and NIS 1 million for an individual.

Now it looks like there will be growing means of enforcement that is substantial because the ISA is currently initiating stronger enforcement procedures.

Until now the Committee has issued three decisions: the two first decisions in 2012 dealt with two investors that manipulated securities prices and relatively modest sanctions were imposed on them of NIS 50,000 and NIS 35,000 each. In both cases, the sanctions that were imposed were far from the upper sanctions threshold in the Law.

The reason for this lies in the declared policies of the ISA chairman to hand down light punishments at the start of implementing the process and make the punishment more severe subsequently.

Evidence of this is the pronouncement by the ISA chairman not to demand, on the immediate implementation of the Law, imposing more than half of the amount of the maximum sanction in administrative proceedings. It is possible to understand the Committee's policies from the first two decisions in which the policy to give light punishments was revealed in the first year of activities.

The originality of the process has also contributed to the fact that the Committee has so far preferred to subordinate itself to the amount of the levies and to vary the means of the imposition required by the ISA, despite that even in this matter it has not had a binding announcement.

At the end of October 2013, to mark two years since its formation, a precedent decision was announced (by Emeritus Judge Bracha Ofir-Tom, Chairman of the Panel) (T.M. 1/13) on the matter of Africa-Israel Industries and its CEO Avraham Novogrocki, CFO Alon Harpaz and Negev Ceramics CEO Avi Motola. This decision, in contrast to previous decisions, indicates a significant increase in severity in the punishment policy both in terms of the amount of the sanctions and reduction in the gap towards the ceiling set by law, both because the Committee imposed personal financial sanctions for substantial amounts on the corporate executives.

At the heart of this affair, was an offer to purchase published by Africa-Israel Industries to buy the public shares of its subsidiary Negev Ceramics and make the company private without revealing the advanced talks between Negev and the Canadian company Olympia for implementing a large ceramic tiles export deal.

In a long decision the Committee detailed the facts of the case, and in this way revealed the collection of testimony and documents gathered and which the ISA presented before it, in a manner that allowed a rare glimpse into the far-reaching powers of investigation and inquiry that the ISA makes use of as part of administrative procedures.

The punishments imposed in this instance as the request of the ISA were unprecedented in their scope on Africa-Israel a sanction of NIS 5 million was imposed, on the Africa-Israel CEO a personal sanction of NIS 400,000, on Negev Ceramics CEO a personal sanction of NIS 150,000 and on Africa-Israel's VP CFO a relatively "modest" sanction of NIS 75,000 was imposed.

As an indication of what is to come, and so that we should learn that the greater severity in enforcement has not yet reached its peak, the Committee pointed out in its decision that the punishments imposed were "most moderate" in relation to the Law, and reflected compassion towards the executives.

The Committee included in its decision an implied "reprimand" to the ISA that it has not petitioned for assistance in order to prevent the terms of office of the executives, and instructed it to raise in future the punishments requested in similar cases so that justice can be seen to be done.

This decision marks the end of the "grace period" that has been characterized by moderate punishments for administrative offences in the "running-in" period for the Law.

From now, there can be expected more severe enforcement on behalf of the ISA, which will be expressed in the swifter opening of administrative enquiries and proceedings of which as part of them the ISA can be expected to demand imposition of the maximum sanction and a wider range of enforcement means to deter than in the past.

At the same time, it can also be expected that the Committee will continue to in its policy of "removing gloves" and in the appropriate cases will impose heavier punishments requested by the ISA, and it can be estimated that it will grant itself the freedom to make the punishments even more severe than those that the ISA is asking that it impose.

The Securities Law prohibits assuring the results of administrative enforcement procedures. This fact combined with the greater severity becoming apparent in punishment requires public companies and their top executives, who may not have conducted themselves in such a way so far, to behave from now on particularly carefully in carry out the obligations required of them, and most importantly the obligation of disclosure and reporting, lest they find themselves caught up in swift and painful administrative enforcement procedures.

Likewise, it is recommended that companies that have not yet formulated and operated internal enforcement programs, do so as quickly as possible, due to the publication of the ISA's procedure from 2011 that the existence of an effective internal enforcement program will be one of the considerations to ease its enforcement policies against corporations and their top executives.