Reg FD Busts Didn't Rock Anyone's World

Two years of anticipation over Regulation Fair Disclosure ended this week with more whimper than bang.

In its first-ever enforcement proceeding under the disclosure regulation, the Securities and Exchange Commission fined Siebel SystemsSEBL $250,000 (and entered cease and desist orders against two other companies).

Siebel Systems CEO Tom Siebel's habit of changing his tune about business conditions got the firm in trouble when his extemporaneous riff at an investment conference last year was deemed a violation of Reg FD.

That penalty has led some to wonder whether executives might become more tight-lipped at investor conferences, such as the one at which Siebel made his comments, and whether investors and even companies may cut back on attendance at such conferences. Overall, however, with Regulation FD already in place for two years, many believe the only fallout may end up being an increased move to Webcast such events to avoid violating the disclosure rule.

"The reason I say I don't think it's going to change things is, when I look at the releases, these are three very straightforward cases of what you should not do," said Lou Thompson, president and CEO of the National Investor Relations Institute, referring to the three Reg FD actions, including the Siebel case, announced this week. "Quite frankly, I don't even look at them as close calls. Most savvy IR people wouldn't do this."

In the Siebel case, the CEO told investors at a Goldman Sachs technology conference last November that he was "pretty optimistic" about what he was seeing and that IT buying patterns were returning to "normal." Those comments came about three weeks after he said in an earnings call that the environment was "as difficult as any in the history of the industry of the information technology industry" and that he expected things to be "quite tough through the remainder of the year."