Securities and Exchange Commission v. Siebel Systems, Inc., et al.

Case Updates

The federal district court granted Siebel Systems’ motion to dismiss the case filed against the company for alleged violations of SEC Regulation FD [“Fair Disclosure”]. The court found that SEC failed to support its allegations that certain positive statements made by company officials constituted “material nonpublic information” that should have been disclosed to the public. In doing so, the court chided the Commission for “[a]pplying Regulation FD in an overly aggressive manner” and for “plac[ing] an unreasonable burden on a company's management and spokesperson to become linguistic experts, or otherwise live in fear of violating Regulation FD should the words they use later be interpreted by the SEC as connoting even the slightest variance from the company’s private statements.”

NCLC supported Siebel Systems challenge to SEC Regulation FD [“Fair Disclosure”]. Regulation FD states that public companies cannot disclose material information to securities analysts and institutional investors without also disclosing it publicly. NCLC contended that the regulation greatly exceeded the SEC's statutory authority and impaired fundamental First Amendment values.