SEC Sues Siebel for Second Time on Disclosure Violation

From Bloomberg News

Siebel Systems Inc., the world’s largest maker of customer-service software, was sued a second time by securities regulators who say two executives violated a rule barring selective disclosure of news to favored investors.

The Securities and Exchange Commission says in its suit that Kenneth Goldman, Siebel’s chief financial officer, and Mark Hanson, who heads investor relations, told institutional investors last year that the company was performing better than it had publicly stated.

San Mateo, Calif.-based Siebel, as well as Goldman and Hanson, were named as defendants.

It’s the second time Siebel has run afoul of the SEC’s Regulation Fair Disclosure, which forbids companies from releasing news selectively. In November 2002, Siebel paid a $250,000 penalty to the SEC for violating the rule at an invitation-only conference sponsored by Goldman Sachs in 2001.


“We thought that the first case against Siebel sent a very strong message about the importance of complying with Reg FD, and apparently the message didn’t have its intended effect, because only six months later the company committed another violation,” Scott Friestad, an assistant director in the SEC’s enforcement division, said in an interview.

Siebel lawyer John Dwyer didn’t immediately return calls seeking comment.

The SEC alleges in the complaint that on April 30, 2003, Goldman “made positive comments about the company’s business activity levels and transaction pipeline. These statements materially contrasted with negative public statements made by the company.”

Shares of Siebel Systems dropped 42 cents to $10.59 on Nasdaq.