UNITED STATES DISTRICT COURT
Securities and Exchange Commission,
SIEBEL SYSTEMS, INC.,
Civil Action No. 1:02CV02330 (JDB)
II. This Court has jurisdiction pursuant to Sections 21(d)(3) and 27 of the Exchange Act [15 U.S.C. §§ 78u(d)(3) and 78aa]. Defendant, directly or indirectly, used the means and instrumentalities of interstate commerce, or of the mails, or the facilities of a national securities exchange, in connection with the acts, practices and courses of conduct alleged herein.
III. Venue is proper in this district pursuant to Sections 21(d)(1) and 27 of the Exchange Act [15 U.S.C. §§ 78u(d)(1) and 78aa].
IV. Siebel Systems, Inc. ("Defendant" or the "Company") is a Delaware corporation with its headquarters in San Mateo, California. At all relevant times, the Company's common stock was registered with the Commission pursuant to Section 12(g) of the Exchange Act and traded on the NASDAQ National Market under the symbol SEBL. The Company is a provider of customer relationship management (CRM) software and other business applications.
V. This matter arises under Regulation FD, 17 C.F.R. § 243.100, et seq., which became effective on October 23, 2000. Regulation FD prohibits issuers from selectively disclosing material, nonpublic information to certain persons - securities analysts, broker-dealers, investment advisors and institutional investors - before disclosing the same information to the public.
VI. On November 5, 2001, the Company's Chief Executive Officer ("CEO") disclosed material, nonpublic information to persons outside the Company at an invitation-only technology conference hosted by Goldman Sachs & Co. ("Goldman Sachs") in California (the "Technology Conference"). In response to questions from the Goldman Sachs analyst who organized the conference, the Company's CEO disclosed that the Company was optimistic because its business was returning to normal. These statements contrasted with negative statements that he had made about the Company's business three weeks earlier, in which he characterized the market for information technology as tough, and indicated that the Company expected business to remain that way for the rest of the year.
VII. Immediately following the disclosures, certain attendees at the conference purchased the Company's stock or communicated the disclosures to others who purchased its 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 public did not have equal access to and was unable to benefit from the information that was disclosed to the attendees at the Technology Conference.
VIII. The Company's CEO knew that his comments were based on internal information concerning what the Company was observing in its sales pipeline and reflecting a positive trend in the transactions that the Company was completing and expected to complete with its customers. He was aware that this information was both material and nonpublic. The Company's Director of Investor Relations knew that the Technology Conference was not being web-cast or otherwise disseminated to the public, but failed to provide this information to the Company's CEO before he made his statements. As a result, the Company knew or was reckless in not knowing that it was selectively disclosing material nonpublic information at the Technology Conference - amounting to an "intentional" selective disclosure within the meaning of Regulation FD.
IX. Plaintiff re-alleges and incorporates by reference paragraphs 1 through 8 above.
X. Regulation FD requires that when an issuer discloses material, nonpublic information to persons outside the issuer, it must simultaneously disclose such information to the public. Where the issuer knows or is reckless in not knowing that the information it is communicating is both material and nonpublic, the disclosure is intentional within the meaning of Regulation FD.
XI. The Company intentionally disclosed material, nonpublic information at the Technology Conference without making simultaneous disclosure of that information to the public.
XII. Accordingly, the Company violated Section 13(a) of the Exchange Act and Regulation FD, 17 C.F.R. § 243.100, et seq.
WHEREFORE, the Commission respectfully requests that the Court enter a Final Judgment ordering Defendant to pay a civil money penalty pursuant to Section 21(d)(3) of the Exchange Act.
Scott W. Friestad
Daniel M. Hawke
(D.C. Bar No. 424874)
Lavonna Delane Olson
Attorneys for Plaintiff
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549-0708
Dated: November 25, 2002
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