A pedestrian walks in front of an AT&T location in New York.
Scott Mlyn | CNBC
The Securities and Exchange Commission accused AT&T and three of its executives of selectively giving some Wall Street analysts access to non-public information without sharing it widely.
The SEC claimed in a new complaint Friday that in March 201
AT&T shares were slightly negative in trading after hours Friday.
The SEC argued that internal documents made it clear that data was generally considered to be material to investors and could not be disclosed selectively under the Fair Disclosure Regulation (Regulation FD). The regulation states that essential 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 claimed, analysts lowered their estimates of revenue. That meant the consensus estimate ended just below the number AT&T eventually reported for the quarter, according to the complaint.
According to the complaint, AT&T was stated to fall more than DKK 1 billion. Under the consensus revenue estimate for the quarter prior to executives’ calls. The complaint alleges that AT & T’s CFO instructed the company’s investor relations department to “work” analysts who had estimates for equipment that were “too high.”
The SEC claimed that Black incorrectly presented the information about the private calls with analysts as publicly available. The complaint alleges, “Black knew or ruthlessly ignored that he misrepresented the information he passed on to analysts because he tracked AT & T’s calculation of consensus estimates – none of which matched the information he provided about the calls to analysts.”
In a lengthy statement following the complaint, AT&T said the case “represents a significant departure from the SEC’s own long-standing FD enforcement policy and is incompatible with the testimony of all those who participated in those talks.”
The company went on to say that the information discussed in the calls with analysts “” related to the widely reported, industry-wide phasing out of subsidy programs for new smartphone purchases and the impact of this trend on smartphone upgrade rates and equipment revenue. Not surprisingly, without device support, customers upgraded their smartphones less frequently, leading to a reduction in equipment revenue. “
AT&T also said it had already announced that declining telephone sales did not have a significant impact on earnings.
“The SEC’s pursuit of this case does not protect investors and instead serves only to cool productive communications between companies and analysts, something the SEC was concerned about when it adopted Regulation FD about 20 years ago,” AT&T said in the statement. “Unfortunately, this case will only create a climate of uncertainty among public companies and analysts covering them.”
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