NEW YORK: More than two years after the SEC adopted Regulation Fair Disclosure (Reg FD), the agency handed down its first set of enforcement actions resulting from alleged violations of the rule.
Three companies settled cases with the SEC, including Siebel Systems, which agreed to pay a $250,000 fine. Raytheon and Secure Computing Corporation were also admonished, and accepted cease-and-desist orders. The CFO of Raytheon and Secure Computing's CEO Tom Siebel were both named in the action. However, neither company would admit nor deny the charges as a result of their settlements.
The SEC also produced a "Report of Investigation" against Motorola, which is an inquiry that stops short of an enforcement action.
The settlements mark the first time the SEC has closed actions relating to the controversial Reg FD rule, which was adopted by the agency in 2000 as an attempt to closely circumscribe the way companies are allowed to disseminate information to their shareholders. Reg FD is designed to prevent companies from providing large investors and Wall Street analysts with information that is likely to impact a company's share price before that information becomes public.
For example, Siebel was accused of providing bullish future projections at a private brokerage conference for a select group of investors, and it was alleged that Raytheon and Secure Computing had passed on nonpublic information to analysts and institutional investors, respectively.
The SEC spared Motorola an enforcement action related to alleged disclosures to analysts because the agency concluded that the company's IRO was given bad advice by a company attorney.
"We caution, however, that reliance on counsel will not necessarily provide a successful defense in all future cases," said the report.