Home https://server7.kproxy.com/servlet/redirect.srv/sruj/smyrwpoii/p2/ Business https://server7.kproxy.com/servlet/redirect.srv/sruj/smyrwpoii/p2/ The SEC accuses AT&T of selectively sharing investment information with analysts

The SEC accuses AT&T of selectively sharing investment information with analysts



A pedestrian walks in front of an AT&T location in New York.

Scott Mill CNBC

The Securities and Exchange Commission has accused AT&T and three of its executives of selectively giving some Wall Street analysts access to non-public information without sharing it widely.

In a new complaint, the SEC said on Friday that in March 201

6, AT&T learned that its revenue would be lower than analysts’ forecasts due to a larger-than-expected decline in smartphone sales in the first quarter. To keep it from falling short of expectations, the SEC said, AT&T Investor Relations executives Christopher Womack, Michael Black and Kent Evans called analysts at about 20 companies to reveal internal sales data and how this would affect revenue.

Shares of AT&T were slightly negative on Friday after trading hours later.

The SEC argues that internal documents clearly show that data is generally considered essential to investors and cannot be disclosed selectively under the Fair Disclosure Regulation (FD Regulation). This regulation states that material information must be shared publicly when shared with certain market professionals and analysts in order to promote a level playing field.

As a result of these calls, the SEC said, analysts lowered their revenue forecasts. This meant that the consensus estimate was just below AT&T’s number, which was ultimately reported for the quarter, according to the complaint.

According to the complaint, AT&T had to fall by more than $ 1 billion below the consensus revenue estimate for the quarter before the calls to executives. The complaint alleges that AT&T’s CFO instructed the company’s investor relations department to “work” analysts who had equipment ratings that were “too high.”

The SEC claims that Black misrepresented information about private conversations with analysts as publicly available. The complaint alleges, “Black knew or recklessly disregarded the misrepresentation of the information he provided to analysts by following AT&T’s consensus estimates – none of which matched the information he provided. during talks with analysts. “

In an extensive statement following the complaint, AT&T stated that the claim “represents a significant departure from the SEC’s long-standing policy of implementing the FR Regulation and contradicts the testimony of all those involved in these talks”.

The company went on to say that the information discussed in the interviews with analysts “refers to the widely reported, industry-wide postponement of subsidy programs for new smartphone purchases and the impact of this trend on smartphone upgrade levels and equipment revenue. for devices, customers upgraded their smartphones less frequently, which reduced equipment revenue. “

AT&T also said it had already publicly stated that declining phone sales did not have a significant impact on profits.

“The SEC’s prosecution on this issue will not protect investors and will instead only serve to cool productive communication between companies and analysts, something the SEC was worried about when it adopted the FD Regulation about 20 years ago,” the statement said. AT&T. “Unfortunately, this case will only create a climate of uncertainty among public companies and the analysts who cover them.”

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