Securities and Exchange Commission v. Siebel Systems, Inc.

Kenneth Goldman (defendant), chief financial officer of Siebel Systems, Inc. (SSI) (defendant) spoke about the company at two private events on April 30, 2003. At those events, Goldman told groups of institutional investors that SSI’s business activity levels were “good,” that the sales transaction pipeline was “building” and “growing,” and that there were some $5 million deals in the pipeline. Shortly after these events, a number of attendees bought stock in SSI. Earlier in April 2003, SSI’s CEO Thomas Siebel made public statements at a series of conference calls. Among many other comments, Siebel stated that SSI’s first quarter results were poor, that second quarter revenues were expected to increase but only if the economy improved, and that there were no indications that the economy as a whole was improving. Siebel also stated that there would probably be large transactions in the pipeline. SSI did not make any public disclosures relating to the statements Goldman made on April 30. The Securities and Exchange Commission (SEC) sued Goldman, SSI, and another officer of SSI for privately disclosing material nonpublic information regarding SSI in violation of Regulation FD. The SEC argued that Siebel’s projection had been downbeat and tied future improvement to general economic improvement, while Goldman’s statements had been much more positive. The defendants moved to dismiss the complaint for failure to state a claim.