SEC charges AT&T and Investor Relations employees for analyst calls


U.S. securities regulators have tasked AT&T and three members of its investor relations team to selectively disclose information to analysts covering the U.S. telecommunications company in order to avoid falling short of expectations. Wall Street.

The three executives made one-on-one private calls to analysts from around 20 different research groups, the Securities and Exchange Commission said on Friday, after discovering in March 2016 that the decline in smartphone sales would leave the AT&T revenue over $ 1 billion below consensus estimates. for the quarter.

AT & T’s CFO instructed his investor relations department to “get the analysts who still have excessively high equipment revenues to work,” the SEC complaint alleged.

As a result, the SEC said, analysts lowered their forecast, lowering Wall Street’s consensus earnings estimate to just below the level AT&T ultimately reported.

AT&T rebuffed the allegations, challenging the regulator’s claim it had shared important non-public information and warning that the accusations “would only serve to chill productive communications between companies and analysts.”

“Tellingly, after spending four years investigating this case, the SEC is not citing a single witness involved in any of these analyst calls who believe important non-public information has been passed on to them,” said the company in a press release.

Investors often punish the actions of companies whose financial results lack estimates, but the financial disclosure regulation known as Reg FD, introduced in 2000, prohibits company executives from trying to massage expectations by the through selective briefings. Instead, the SEC insists that material information must be disclosed to all investors publicly and simultaneously.

The SEC complaint, filed in Manhattan Federal District Court, alleges AT&T investor relations officials leaked inside data on smartphone sales despite knowing the numbers were believed to be “Important” to investors and therefore should not be selectively disclosed.

AT&T disputed the regulator’s claims, saying that “mid-level” investor relations officials had only discussed a “widely reported” industry-wide trend towards phasing out subsidies for investors. purchases of new smartphones – a trend the company had discussed publicly several times before the calls to analysts.

Investors, he added, understood at that point that smartphone sales were “intangible” for A&T profits.

The SEC said it was seeking a permanent injunction and civil monetary penalties against the three investor relations officials – Christopher Womack, Michael Black and Kent Evans.

AT&T said it was eager to prove in court that the SEC’s allegations were “without merit.”

“Unfortunately, this case will only create a climate of uncertainty among public companies and the analysts who cover them,” he said.

The SEC has rarely taken any enforcement action relating to Reg FD in recent years. His 2019 settlement of the charges with TherapeuticsMD, a small pharmaceutical company, was his first action focused solely on financial disclosure rules in six years.



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