A New York judge rejected the SEC’s finding that Siebel had breached a regulation prohibiting companies from selectively tipping off analysts and large investors to important corporate developments.

It took some 27-pages but U.S. District Judge George B. Daniels dismissed the SEC’s claims that Siebel execs in April of 2003 privately told some large institutional investors that business was better than had been publicly described and that those remarks were responsible for a subsequent 8 percent runup in the company’s stock.

"[The] nature and content [of the statements by Siebel officials] do not support the Commission’s claim that Siebel Systems or its senior officials privately disclosed material nonpublic information … Excessively scrutinizing vague general comments has a potential chilling effect which can discourage, rather than encourage, public disclosure of material information," Daniels wrote.

"[The agency’s approach] places an unreasonable burden on a company’s management and spokespersons to become linguistic experts." Daniels ruling is something of a blow to the SEC.

Said Columbia University law professor John C. Coffee Jr., ”I do think this is a serious problem for the SEC because in other cases defendants will raise this decision and claim that they could not have known that given information was material when they leaked it to analysts."

Finally someone rules in favor of conversations but unfortunately not necessarily in favor of transparency. SEC guidelines were definitely tempering very important and meaningful conversations with analysts, driving execs to use necessarily opaque language – like "I’m not saying it’s good or bad. We are having positive conversations with customers."

But by allowing small groups to benefit from intimate conversations with companies in which the complete context of conversations (body language, tone…) results in the stock moving (and I am not suggesting Siebel did) the judge is only reinforcing the very opacity the SEC created with its rules.

What are your thoughts… Would love to hear them…