U.S. Securities and Exchange Commission
Litigation Release No. 17860 / November 25, 2002
Securities and Exchange Commission v. Siebel Systems, Inc., Civil Action No. 1:02CV02330 (JDB), (D.D.C.) (November 25, 2002)
In the Matter of Siebel Systems, Inc., Administrative Proceeding File No. 3-10949 and Securities Exchange Act Release No. 46896
SEC Files Settled Cease-and-Desist Order Against Siebel Systems, Inc. Finding that It Violated Regulation FD; Siebel Systems, Inc. Also Agrees to Pay a $250,000 Civil Penalty
The Securities and Exchange Commission announced today the filing of a civil action against Siebel Systems, Inc. in the U.S. District Court for the District of Columbia. The company consented, without admitting or denying the Commission's allegations, to pay a $250,000 civil penalty. The Commission also announced the filing of a settled cease-and-desist order against the company. The Commission's Order finds that the company violated Section 13(a) of the Exchange Act and Regulation FD and orders the company to cease and desist from committing or causing violations of these provisions.
Regulation FD prohibits issuers from selectively disclosing material, nonpublic information to certain persons securities analysts, broker-dealers, investment advisers and institutional investors before disclosing the same information to the public. The Commission's Order finds that, on November 5, 2001, the company's Chief Executive Officer disclosed material, nonpublic information to the attendees of an invitation-only technology conference in California. At the conference, the company's CEO made positive comments about the company's business that were based on material, nonpublic information and that contrasted with negative statements that he had made about the company's business in a public conference call three weeks earlier. The public did not have access to the technology conference and was unable to benefit from the information that was disclosed at the conference.
Immediately following the disclosures, certain attendees at the conference purchased the company's stock or communicated the disclosures to others who purchased the stock. On the day of the conference, the company's stock price closed approximately 20% higher than the prior day's close and the trading volume was more than twice the average daily volume. The Order finds that the company's CEO was aware that his comments at the conference were based on material, nonpublic information. The Order further finds that the company's Director of Investor Relations knew that the technology conference would not be simultaneously broadcast to the public, but did not advise the company's CEO of this fact. As a result, the company intentionally disclosed material, nonpublic information and violated Section 13(a) of the Exchange Act and Regulation FD. The company consented, without admitting or denying the findings in the Commission's Order, to cease and desist from committing or causing violations of these provisions. The allegations in the Commission's civil action are substantially the same as set forth in the Commission's Order.
SEC Complaint in this matter