AT&T To Pay $6.25 Mln Penalty To Settle SEC Charge Of Disclosing Nonpublic Information To Analysts

(RTTNews) - AT&T Inc. (T) agreed to pay a $6.25 million penalty and three company executives agreed to pay $25,000 apiece stemming from charges brought in March 2021 related to the company's selective disclosure of material nonpublic information to research analysts, the U.S. Securities and Exchange Commission said in a statement.

The penalty that AT&T agreed to pay is the largest ever in a Regulation FD case. According to the SEC's complaint, AT&T learned in March 2016 that a steeper-than-expected decline in its first quarter smartphone sales would cause AT&T's revenue to fall short of analysts' estimates for the quarter.

The complaint alleged that, 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 about 20 separate firms.

On these calls, the AT&T executives allegedly disclosed 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 therefore prohibited from selective disclosure under Regulation FD.

The complaint also alleged that the nonpublic information provided on these private calls caused analysts to substantially reduce 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.