## Facts

- The SEC sued Siebel Systems, Inc., its CFO Kenneth P. Goldman, and its head of investor relations Mark A. Hanson, alleging selective disclosure in violation of Regulation FD and reporting provisions under Exchange Act § 13(a) and related rules.
- Earlier in April 2003, Siebel’s CEO made publicly accessible, generally downbeat statements about results and outlook, while also acknowledging the likelihood of large transactions in the sales pipeline.
- On April 30, 2003, Goldman spoke at two nonpublic events attended by institutional investors: an invitation-only conference and a private dinner.
- The SEC alleged Goldman told attendees that business activity levels were “good,” the sales pipeline was “building” or “growing,” and there were “some $5 million deals in the pipeline.”
- The SEC alleged these private statements “materially contrasted” with the earlier public remarks and were not accompanied by simultaneous or prompt public disclosure.
- Defendants moved to dismiss the complaint under Federal Rule of Civil Procedure 12(b)(6).

## Issues

1. Whether the complaint plausibly alleged that the April 30 statements conveyed information that was material under the “total mix” standard.
2. Whether the complaint plausibly alleged that the information conveyed was nonpublic, rather than substantially duplicative of prior public disclosures.
3. Whether qualitative differences in wording or tone between public and private statements can, without new substantive facts, support a Regulation FD claim.

## Decision

- The court granted defendants’ Rule 12(b)(6) motion and dismissed the complaint in its entirety.
- The court held the SEC failed to allege a selective disclosure of material nonpublic information as required to state a Regulation FD claim.
- The court concluded the alleged private remarks were not materially different from earlier public statements and did not add meaningful new factual content.
- The court found post-event investor trading and price movement insufficient, standing alone, to establish materiality.
- Because the complaint failed on the elements of materiality and nonpublicness, the court did not reach broader statutory or constitutional challenges to Regulation FD.

## Legal Principles

- Regulation FD liability requires a disclosure to a covered person of material nonpublic information, without required simultaneous (intentional) or prompt (non-intentional) public disclosure.
- Materiality turns on whether a reasonable investor would view the information as significantly altering the total mix of available information.
- Where prior public disclosures already convey the substance of later private remarks, minor variations in wording or optimism generally do not constitute material nonpublic information.
- Regulation FD does not treat issuers’ officials as bound to rigid verbal uniformity; enforcement cannot rest on hyper-technical parsing of language untethered to substantive new facts.

## Conclusion

The court dismissed the SEC’s enforcement action because the alleged April 30 private statements did not plausibly amount to the selective disclosure of material nonpublic information; they were substantially consistent with earlier public disclosures and lacked new, concrete facts that would significantly change what a reasonable investor already knew.


SEC v. Siebel Sys., Inc., 384 F. Supp. 2d 694 (S.D.N.Y. 2005)