Securities and Exchange Commission (SEC) officials have detailed a settlement agreement in which AT&T has agreed to pay a $6.25 million penalty stemming from March 2021 SEC charges.
Additionally, the SEC noted three company executives agreed to pay $25,000 apiece as part of the SEC’s charges related to the company’s alleged selective disclosure of material nonpublic information to research analysts in violation of Regulation FD and Section 13(a) of the Securities Exchange Act of 1934.
Without admitting or denying the allegations in the complaint, the defendants consented to final judgments permanently enjoining them from violating, or aiding and abetting violations of, Regulation FD and Section 13(a) of the Securities Exchange Act of 1934 and ordering them to pay the penalties, according to the SEC.
According to the SEC complaint, the agency alleged AT&T learned in March 2016 that a steeper-than-expected decline in its first-quarter smartphone sales would cause the company’s revenue to fall short of analysts’ estimates for the quarter.
The complaint alleged to avoid falling short of consensus revenue expectations for the third consecutive quarter, AT&T investor relations executives Christopher Womack, Michael Black, and Kent Evans made private, one-on-one phone calls to analysts at approximately 20 separate firms – allegedly disclosing AT&T’s internal smartphone sales data and the impact of that data on internal revenue metrics, even though, among other things, internal documents specifically informed investor relations personnel that AT&T’s revenue and sales of smartphones were types of information generally considered “material” to AT&T investors, and prohibited from selective disclosure under Regulation FD.
“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,” SEC Division of Enforcement Director Gurbir S. Grewal said.