October 2 2008, 00:29
I. A Short Introduction
With the recent collapse of numerous financial institutions, the practice of short-selling (“shorting”) has come under fire. Some authors have gone so far to claim that the actions of short-sellers (“shorters”) are among the core reasons for the current credit crisis. In response to this outcry, the United States has imposed temporary bans on the shorting of certain stocks, particularly the stocks of firms in the banking and finance sector, citing the need to protect investors and markets. Furthermore, New York Attorney General Andrew Cuomo has launched an investigation into shorters for allegedly spreading false rumors in the financial market. These enforcement responses prompt the question; do shorters have a legitimate role to play in a fair and open market? [More]
February 27 2008, 09:25
There have been a number of calls lately for increased regulation of the hedge fund industry, however, the Bush Administration has said that no new regulations are necessary. Despite the rapid growth of the industry and the increasingly large risks hedge funds are taking, the recently released report by the President’s Working Group on Financial Markets, which was led by the Treasury Department, did not call for any new regulations, but instead called for a set of principles to be implemented, such as accurate disclosures by fund managers and more due diligence by creditors.  Nevertheless, the Group of Seven (G7), of which the United States is a member and comprises the seven wealthiest countries in the world, vowed to continue looking into what new measures should be taken in order to impose stricter scrutiny over the risks being taken by hedge funds, and the risks they pose to the global economy.  [More]
February 4 2008, 15:34
While the decision of the Second Circuit Court of Appeals binds many public companies of that specific jurisdiction, the SEC must now decide whether to propose a clarifying change to Rule 14a-8(i)(8) ("the Rule"), binding all companies subject to Federal Securities Law and alleviating courts of difficult interpretation. A letter from shareholders to the Honorable Christopher Cox, requesting a return to the pre-1990 interpretation of the Rule, stressed an important distinction: ". . . between using a shareholder resolution as a back-door device to contest a specific election and using a shareholder resolution in order to change the rules for election so as to further the long-term interests of shareholders." [More]
October 31 2007, 19:02
This second article in the series first identifies past assumptions of the traditional investment model. Possible additional benefits and drawbacks of morally responsible investing (MRI) as compared to the traditional model are pointed out along the way. Finally, future legal issues that MRI may raise are identified, and the court’s likely treatment of such issues is hypothesized. [More]
October 5 2007, 19:08
Whether it is through mutual funds, pensions or direct purchases of shares in companies, some investors are taking more than profit maximization into consideration when investing. These investors seek to promote individual social or moral preferences by choosing investments based on the products and procedures of an investment, rather than solely on accounting profitability. Essentially, these investors are looking to use their money for both moral and monetary profit. Of course, when it comes to capital markets, the customer, i.e. the investor, is still the boss. Thus understanding this trend is not merely an academic exercise but perhaps a lesson to those seeking funding. [More]
April 9 2007, 09:24
The United Nations Security Council voted unanimously at the end of March to impose new sanctions on Iran in order to persuade Tehran to abandon its plans to enrich uranium.  There have been mixed reactions to the move, with some saying that sanctions will effectively isolate the rogue Iranian regime and it’s President, Mahmoud Ahmadinejad, who has been a thorn in the side of the United States and the Bush administration as it has tried to achieve its policy objectives in the Middle East. Others, however, have called the latest sanctions a weak attempt with little chance of success in regards to actually bringing about the end of Iran’s nuclear ambitions. [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.