Risk & Compliance

SEC Charges Siebel, CFO, with Reg FD Breaches

Finance chief allegedly disclosed material information at a private meeting with an institutional investor and at an invitation-only dinner hosted ...
Stephen TaubJune 30, 2004

The Securities and Exchange Commission has charged Siebel Systems Inc. with violating its Regulation Fair Disclosure (FD) rule for the second time since the rule went into effect less than four years ago, according to Reuters.

The commission also charged Kenneth Goldman, the software company’s CFO, and Mark Hanson, the former investor-relations director and current senior vice president of corporate development, with aiding and abetting violations of the rule.

The rule is designed to prevent companies from disseminating material, potentially market-moving information to a select group of investors. In November, Siebel warned that the SEC may take enforcement action against the company and several officers, for statements allegedly made during an April 30, 2003 business dinner.

The SEC alleges that Goldman disclosed material, nonpublic information during a private meeting with an institutional investor and an invitation-only dinner hosted by Morgan Stanley that he and Hanson attended in New York on that date, according to Reuters.

Goldman allegedly made “positive comments” about the company’s business- activity levels and transaction pipeline, contrasting with “negative public statements” made by the company in the three weeks leading up to the meetings, the news service reported.

“Recipients of this information promptly acted on it either by trading or by further disseminating it to selected investors,” the SEC stated.

The SEC also charges that Hanson, who headed Siebel’s Reg FD compliance, failed to prevent the disclosures and that both Hanson and Goldman failed to cause Siebel to make a public disclosure the next day. The commission’s complaint also alleges that the company failed to maintain adequate disclosure controls and procedures.

A lawyer representing Siebel Systems, Goldman, and Hanson, did not respond to a Reuters request for comment. The company had no immediate comment, the news service reported.

In 2002, the SEC alleged that CEO Thomas Siebel disclosed material, nonpublic information to attendees at an invitation-only technology conference hosted by Goldman Sachs & Co. the prior year. The company agreed to pay a $250,000 penalty.

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