The company could end up having to pay out a big settlement as a result of the charges, which include a charge that it broke the cease-and-desist order it agreed to last time it was accused of breaking Securities and Exchange Commission rules.
The SEC said yesterday that it is suing Siebel for violating Regulation FD, which prohibits executives from public companies from discussing material financial information privately, and, in doing so, for violating the cease-and-desist order.
Siebel CFO Kenneth Goldman is alleged to have disclosed material non-public information to analysts and investors in private New York meetings in April 2003. The SEC said former investor relations director Mark Hanson did not prevent the disclosures.
The day after the alleged disclosures, Siebel stock jumped 8% on unprecedented high trading levels. The SEC says this was due to an institutional investor bolstering its position in Siebel, based on bullish news received on the quiet from Goldman.
The SEC is also enforcing for the first time a section of the Exchange Act that obliges companies to maintain disclosure controls and procedures designed to ensure the proper handling of information that is required to be disclosed in reports.
It could be bad news for Siebel, which was the first company to pay a cash penalty in relation to alleged Regulation FD violations. The company settled an SEC suit in November 2002, and paid $250,000.
In that case, chairman Tom Siebel was said to have revealed material information to a private Goldman Sachs conference, apparently unaware that it was not being webcast, and that traders starting moving Siebel stock while he was still speaking.
In this latest complaint, the SEC says Goldman revealed information about improving sales that contrasted with downbeat public statements, during a dinner with Morgan Stanley employees and customers.
The SEC also alleges that Siebel’s Goldman the same day had a one-on-one meeting with an investor, Alliance Capital Management Holdings LP, in which he revealed Siebel’s sales pipeline was better than thought.
The SEC wants an order commanding Siebel to comply with the cease-and-desist order, as well as injunctions and civil penalties again all defendants. The company did not return calls for comment yesterday.
