Tuesday, January 31, 2023
HomeMarketAT&T to Pay $6.25 Million in SEC Case About Disclosures

AT&T to Pay $6.25 Million in SEC Case About Disclosures

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AT&T
is paying $6.25 million to the Securities and Exchange Commission over charges from 2021 that it made selective disclosures of nonpublic information to research analysts.

The agency said it is the largest penalty agreed to be paid in a case about Regulation FD, the 2000 rule that prevents some investors from getting market-moving information before others.

The telecommunications giant didn’t admit or deny the allegations. Three executives from its investor relations team involved in the matter will also pay $25,000 each to settle.

An AT&T spokesperson wasn’t immediately available to comment.

Regulation FD, or fair disclosure, was designed to level the playing field between big institutional investors and Wall Street analysts—who enjoy access to company management—and the smaller retail investors who don’t have that kind of access to potentially market-moving information.

According to the SEC, AT&T discovered in March 2016 that a steeper-than-expected decline in its first quarter smartphone sales would mean its revenue for that quarter would fall short of Wall Street’s estimates. So, the three AT&T investor relations executives made one-on-one phone calls with stock analysts at nearly two dozen firms.

On these calls, the SEC said, the executives disclosed AT&T’s internal smartphone sales data and how the numbers would affect internal revenue metrics, even though that information was considered “material” to investors.

The SEC said the information provided to analysts from those phone calls caused the analysts to cut their revenue forecasts “allowing AT&T ultimately to beat the overall consensus revenue estimate when AT&T reported its results to the public on April 26, 2016.”

Under Reg FD, material information has to be disclosed to the entire market, the SEC said. “The actions allegedly taken by AT&T executives to avoid falling short of analysts’ projections are precisely the type of conduct Regulation FD was designed to prevent,” said Gurbir S. Grewal, Director of the SEC’s Division of Enforcement.

AT&T stock was unchanged in aftermarket trading. The stock is down 23.8% so far this year.

Write to Liz Moyer at liz.moyer@barrons.com

Credit: marketwatch.com

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