According to the Company’s FORM 20-F for the fiscal year ended December 31, 2001, on March 16, 2000, the Company and the individual defendants served a motion to dismiss the second amended complaint in its entirety, for failure to state a claim upon which relief could be granted and for failure to plead fraud with the requisite particularity. By Order dated March 9, 2001, the Company’s motion was granted and the 1998 securities action was dismissed with prejudice.

As summarized by the same SEC filing, the actions were consolidated into a single putative class action by a June 10, 1999 Order of the United States District Court for the District of New Jersey, and captioned In re Nice Systems, Ltd. Securities Litigation, No. 99-CV-1693 (AJL). A consolidated and amended class action complaint was filed on July 12, 1999. On January 24, 2000, following the Company’s motion to dismiss the action, the lead plaintiffs in the action were granted leave to file a further amended complaint, which the lead plaintiffs subsequently filed. In the second amended complaint, the lead plaintiffs alleged that the defendants violated Section 10(b) of the Exchange Act, 15 U.S.C. ss. 78j(b), and Rule 10b-5 promulgated thereunder. The lead plaintiffs also attempted to state a "control person" claim against the individual defendants under Section 20(a) of the Exchange Act, 15 U.S.C. ss. 78t(a). The lead plaintiffs essentially contended that the Company and the individual defendants knew that certain products had problems long before the Company’s September 1998 announcement, but misrepresented to investors, either affirmatively or through omissions, the capabilities and readiness of the products, their effect on the Company’s business and the value of the Company’s ADSs.

On March 26, 1999, the Court entered the Order signed by Judge Alfred J. Lechner, Jr. consolidating case 99-1307 with 99-1693 for all purposes. Case 99-1307 was closed and the lead case number became 99-1693.

The original Complaint alleges that the company disseminated false and misleading information about its operations, technologies, products and prospects. As a result, the company's American Depository Shares traded at artificially high prices during the class period.