The U.S. Securities and Exchange Commission (SEC) took its first enforcement actions Monday under a fair disclosure rule enacted in 2000, citing three companies, including Siebel Systems Inc., for violations.
Siebel Chief Executive Officer (CEO) Tom Siebel told attendees at an invitation-only Goldman Sachs & Co. conference on Nov. 5, 2001, that he was optimistic because Siebel’s business was returning to normal, in contrast to his statements three weeks earlier that the IT market was tough and the company expected to face that climate for the rest of the year, according to the SEC. Siebel’s cheery remarks, to which most investors had no access, prompted significant trading and pushed Siebel’s share price up about 20 per cent higher than the previous day’s close.
Regulation FD, which took effect in October 2000, bars companies from selectively disclosing material information before releasing the information publicly. By failing to simultaneously release Tom Siebel’s comments via a Webcast, press release or SEC filing, Siebel ran afoul of the regulation, the SEC said.
The SEC has filed a cease-and-desist order against Siebel. It also sought in federal court Monday a US$250,000 fine for the infraction, a penalty to which Siebel has agreed, according to an SEC representative.
Siebel confirmed the penalty in a statement issued Monday afternoon. Tom Siebel was unaware when he made the remarks that the presentation was not being Webcast, Siebel said. The SEC backed that statement in its own report on the case, noting that while Siebel’s director of investor relations knew no Webcast was planned and spoke with Tom Siebel shortly before the conference, she did not tell him there would be no Webcast.
The SEC settlement will not affect the company’s financial condition, Siebel said, adding that this resolves the only known matter of investigation between the company and the SEC.
The SEC also took action against Raytheon Co. and its chief financial officer, Franklyn Caine, and Secure Computing Corp. and its CEO, John McNulty, for similar violations. It filed an investigation report on Motorola Inc. related to the disclosure regulation, but did not take action against the company.