Business software company Siebel Systems Inc. was accused by regulators on Tuesday of breaking rules on the dissemination of market-moving news, the second time it has faced civil charges for the offense.
The U.S. Securities and Exchange Commission said in a filing that the San Mateo, California-based company, violated a 2001 rule that requires sensitive financial information to be disclosed equally to all investors.
The SEC's charges centered on remarks it said were made by two Siebel executives, Chief Financial Officer Kenneth Goldman and former investor relations director Mark Hanson, at two private gatherings in New York in April 2003. Hanson is currently a senior officer of Siebel.
The two were accused of aiding and abetting the company's violation of Regulation Fair Disclosure, or Regulation FD.
In a statement late Tuesday, Siebel said it would fight the charges.
Siebel said it concluded that no violations had occurred and that the SEC had provided no "credible evidence" to support its allegations. The company said it "is prepared to pursue resolution of this matter through the normal course of civil litigation".
Shares of Siebel, already down after an analyst lowered his price target and earnings estimate, fell further on news of the charges. The stock closed down 3.8 percent at $10.59 on the Nasdaq.
The SEC contends Goldman made "positive comments" about the company's business activity and transaction pipeline, contrasting with "negative public statements" the company made in the three weeks leading up to the meetings.
The SEC said about six institutional investors and Morgan Stanley research and sales personnel attended the dinner at Morgan Stanley's offices.
"Recipients of this information promptly acted on it either by trading or by further disseminating it to selected investors," the SEC said.
The SEC said Siebel, which provides software to manage sales and marketing relationships with customers, violated both the rule and a previous SEC order.
In November 2002, Siebel agreed to pay a $250,000 civil penalty to settle SEC allegations that it violated Regulation FD. Without admitting or denying any wrongdoing, it agreed to an SEC cease-and-desist order from any future violations.
Under the new charges, the SEC said Goldman disclosed material non-public information during two private events he attended with Hanson in New York on April 30, 2003 -- a one-on-one meeting with Alliance Capital Management Holdings LP and an invitation-only dinner hosted by Morgan Stanley.
In the previous settlement, the case centered on information disclosed privately by the company's then chairman and chief executive, Thomas Siebel, at an invitation-only conference sponsored by Goldman Sachs Group Inc. in 2001.
The news of the recent enforcement action was not completely unexpected, since the company disclosed in November that the SEC was pursuing legal action, warning that the outcome could affect results from operations or cash flows.
SEC Enforcement Division Associate Director Antonia Chion said the agency is seeking unspecified civil penalties from the company and from Goldman and Hanson, and wants to force the company to comply with the previous cease-and-desist order.