November 14 2005, 23:58
As the year comes to a close, 2005 will be marked as a leading year of Chief Executive Officer (CEO) turnover. With 1,100 CEOs having already left this year, departures have already exceeded the previous high set in 2000 when the dot-com bubble burst. The trend is a bit surprising as the economy and corporate profits have both been on an up swing this year. While it might be easy to attribute the exodus rate to the impact to the pressures of compliance with Sarbanes-Oxley, there are other factors that seem to provide a better rationale for this year’s trend. [More]
November 3 2005, 23:59
Corporate scandals over the past few years have been numerous and high-profile. As a result, the conduct of directors and officers of corporations have become subject to a high level of scrutiny. In addition to the public keeping a keener eye on the activities of corporations, the Sarbanes-Oxley Act of 2002 has increased the potential liability of directors and officers.  The Act, having established new fines and penalties for the corporate board, has had the incidental effects of causing the price of director and officers (D&O) liability insurance to rise dramatically and of creating a need for more sophisticated D&O insurance. While D&O coverage does exist, albeit it with higher deductible and limited coverage, a recent case demonstrates how directors may still bear the costs of litigation even with a policy.  [More]
October 14 2005, 00:00
September 21, 2005 marked the first open meeting of the Securities & Exchange Commission (SEC) under its new Chairman Christopher Cox. More importantly, at that meeting the SEC approved a one year extension for compliance with Sarbanes Oxley (SOX) section 404 for non-accelerated filers.  The Commission also proposed creating new categories for large accelerated filers, who would be the only category subject to the initial phase-in period and would make it easier for some companies to move from accelerated to non-accelerated filer status.  [More]
September 24 2005, 00:01
Five years after the Securities & Exchange Commission (SEC) passed Regulation FD (“Fair Disclosure”) a court finally had a chance to interpret its application. On September 1, 2005 the United Stated District Court for the Southern District of New York dismissed the SEC’s claims against Siebel Systems, Inc.  Regulation FD prohibits a company from disclosing information to analysts and investors that is non-public.  Adopted
in 2000, the regulation has often been criticized for being overly
broad. However until Siebel no company challenged the regulation in
FD is based on the idea that no group should have advance access to
information about a public company that may impact stock prices or that
may influence trading. Unsurprisingly, one of the regulation’s main purposes is to prevent insider trading. In
an effort to help companies comply Regulation FD considers information
to become public by posting information on a company website, making earnings calls open to anyone, or the filings of an 8-K.  However,
many companies have been wary of sharing information and some have even
stopped giving earnings guidance as a result of the potential liability. Some
companies have even gone as far as to adopt Regulation FD disclosure
policies which outline a procedure, with certain controls in place, for
dissemination of company information.
This was not the first time Siebel has come under SEC scrutiny. In 2002 the Siebel paid $250,000 to settle a alleged violation of regulation FD. In that case the SEC claimed that selective disclosures were made at a Goldman, Sachs technology conference. 
Other companies that have dealt with the SEC enforcement actions under
regulation FD and settled include Motorola, Raytheon and Secure
the present case the SEC alleges that Siebel violated Regulation FD by
comments made by its CFO Goldman at private events in 2003 attended by
investors. Goldman made comments that the
activity level of the company was “good” or “better” and noted that a
few deals were in the works.  These statements are said to contrast
the public statements made by CEO and Chairman Thomas Siebel earlier in
the month.  Furthermore, the complain states that the required 8-K filing disclosing the non-public information was not submitted.  The court dismissed the case for failure to state a claim. In
its opinion the court noted that “the SEC has scrutinized, at an
extremely heightened level, every particular word used … .” 
Additionally, the court found that application of the Regulation in
such an aggressive manner would not encourage the full disclosure of
While this is the first court decision, it may not be the last. The SEC has 60 days to decide if it will appeal to the Second Circuit located in New York.  Especially
since two questions raised by Siebel, if the SEC had authority to issue
the regulation at all and if the regulation is overly broad, remain to
In the meantime, what does this decision mean for companies? First, it means that the SEC will likely be a little less aggressive in looking for violations. But more importantly it gives a little guidance on hot to draft disclosures. If the case is followed, the informational content, not the form will be the focus of Regulation FD violations. Consequently those speaking on behalf of the company may have a bit more leeway then was originally thought. Although Regulation FD still survives, hopefully after this case clearer guidance will be provided for the future.
 SEC v. Siebel Systems, Inc., ___F. Supp. 2d ___, 2005 Westlaw 2100269 (S.D.N.Y. Sept. 1, 2005).
 17 C.F.R. § 243.100 (2000).
 Floyd Norris, Market Place; S.E.C. Puts Data Disclosure in the Spotlight, N.Y. Times, Nov. 26, 2002 at C1.
 SEC v. Siebel Systems, Inc., ___F. Supp. 2d ___, 2005 Westlaw 2100269 at *1.
 Id. at *2.
 Id. at *3.
 Id. at *8.
 Id. at *11.
 Stephen Labaton, Judge Dismisses Disclosure Suit Brought by S.E.C. Against Siebel, N.Y. Times, Sept. 2, 2005, at C9.