The Securities and Exchange Commission filed a court document accusing AT&T Inc. (T.N) of selectively disclosing financial information to Wall Street analysts and demanding a $6.25 million fine in a settlement.
Christopher Womack, Kent Evans, and Michael Black, three firm officials who the SEC claimed were responsible for breaking Regulation FD, or fair disclosure, also agreed to each pay a $25,000 fine without acknowledging or disputing the regulator’s claims, the document said.
“We are committed to following all applicable laws and pleased to have a resolution with the SEC. With this settlement, the company and its employees neither admitted nor denied the SEC’s allegations,” AT&T told Reuters in an emailed statement.
The SEC charged Dallas-based AT&T and three investor relations officers in March 2021 with disclosing information about its smartphone business to 20 companies.
In a 129-page decision, U.S. District Judge Paul Engelmayer in Manhattan said he found “formidable” evidence that AT&T and three investor relations executives improperly warned analysts in March and April 2016 that lower-than-expected smartphone sales would cut into overall revenue.
The SEC said it violated fair disclosure which it adopted in 2000 to bar companies from disclosing material non-public information privately, helping level the playing field for investors.
According to the SEC, the company broke the fair disclosure rule, which was introduced in 2000 and prohibits businesses from providing significant non-public information to third parties, leveling the playing field for investors.
The SEC said that AT&T tried to “manage” those analysts to lower their revenue projections in order for actual outcomes to match the lower projections and avoid disappointing investors who may otherwise drive down the share price of the company.