Siebel Systems, Inc.

Siebel Systems, Inc.

September 01, 2005 14:09 ET

U.S. District Court Dismisses SEC's Siebel FD Claim; Court Says Company Did Not Violate Regulation FD

SAN MATEO, Calif.--(CCNMatthews - Sep 1, 2005) -

A United States District Court - Southern District of New York Judge today granted Siebel Systems Inc.'s (NASDAQ:SEBL) motion to dismiss allegations of a Regulation Fair Disclosure (Regulation FD) violation brought by the U.S. Securities and Exchange Commission (SEC) in 2004. In doing so, the Court completely vindicated the Company and two if its executives, Mark Hanson and Ken Goldman, stating that the SEC's approach and interpretation of Regulation FD "places an unreasonable burden on a company's management and spokespersons 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 public statements."

In the lawsuit, the SEC alleged that Siebel executives who attended a meeting with financial analysts on April 30, 2003 and reiterated prior statements about the company's expected performance violated the regulation which prohibits public companies from disclosing "material, non-public information" on a selective basis.

Siebel Systems filed a motion to dismiss the charges in September 2004 challenging both the SEC's enforcement of the regulation in this case and the validity of the regulation itself. Siebel argued in its motion to dismiss that the comments made at the analyst meeting and challenged by the SEC were virtually identical to the guidance the Company gave in an earnings conference call that was conducted just seven days before the meeting and, thus, did not violate Regulation FD. The Company also argued that Congress had not delegated to the SEC the authority to adopt Regulation FD and that the rule violates important First Amendment principles. Without reaching the constitutionality arguments, the Court agreed with Siebel and dismissed the case.

"It is clear, based on the Court's ruling today, that Siebel Systems did not violate the spirit or letter of Regulation FD," said Siebel counsel Kathleen Sullivan. "We contested the SEC's claims in order to exonerate the company and its executives and to bring clarity to an important issue that was mishandled by the regulators. This was a win not only for Siebel but for all public companies trying to do the right thing."

In his ruling, Judge George B. Daniels wrote, "Regulation FD was never intended to be utilized in the manner attempted by the SEC under these circumstances." He went on to state, "Applying Regulation FD in an overly aggressive manner cannot encourage full and complete public disclosure of facts reasonably deemed relevant to investment decision making. It provides no clear guidance for companies to conform their conduct in compliance with Regulation FD. Instead, the enforcement of Regulation FD by excessively scrutinizing vague general comments has a potential chilling effect which can discourage, rather than, encourage public disclosure of material information."

"We have always prided ourselves on the strong ethics and core values with which Siebel Systems conducts itself on behalf of all stakeholders, and are thrilled with the Court's decision," said George T. Shaheen, Chief Executive Officer, Siebel Systems.

About Siebel Systems

Siebel Systems is a leading provider of customer-facing solutions that deliver demonstrable business results and long-term competitive advantage. Siebel's multichannel offerings allow organizations to intelligently manage and coordinate all customer interactions across the Web, contact center, field sales/service force, branch/retail network, and indirect and partner distribution channels. Siebel solutions draw upon the company's best-in-class capabilities in customer relationship management (CRM), business intelligence, and customer data integration and can be deployed as licensed software or as a hosted service. Siebel solutions are tailored to the unique needs of 23 industries and incorporate industry-specific business processes, best practices, and business insight. They are the product of more than $2 billion in R&D investments and reflect over 11 years of experience with more than 4,000 organizations. Together with its extensive global network of alliance partners, Siebel provides the people, process, and technology expertise critical in driving business value from the deployment of customer-facing solutions. Over 3.4 million users worldwide in organizations of all sizes depend on Siebel solutions to deliver dramatic improvements in how they identify, acquire, retain, and serve customers. For more information, visit

Except for the historical information contained herein, this press release contains forward-looking statements that involve risk or uncertainties. Future operating results of Siebel Systems may differ from the results discussed or forecasted in the forward-looking statements due to factors that include, but are not limited to, risks associated with customer relations, such as the availability of Siebel Systems' products and services, customer implementation of products and services, relationships with customers, third-party vendors and systems integrators, concentration of revenues in a relatively small number of customers, existence of errors or defects in products, ability to successfully manage growth, significant current and expected additional competition and the need to continue to expand product distribution and services offerings. Further information on potential factors that could affect the financial results of Siebel Systems are included in Siebel Systems' Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and its other filings with the Securities and Exchange Commission, which are available at Siebel Systems assumes no obligation to update the information in this press release.

Siebel is a trademark of Siebel Systems, Inc. and may be registered in certain jurisdictions. All other product and firm names mentioned are the property of their respective owners and are mentioned for identification purposes only.

Contact Information