A pedestrian walking in front of an AT&T facility in New York.
Scott Mlyn | CNBC
The Securities and Exchange Commission accused AT&T and three executives of choosing to give some Wall Street analysts access to non-public information without making such information widely available.
The SEC alleged in a new complaint on Friday that in March 2016 AT&T learned that its revenue would be lower than analysts had expected as first-quarter smartphone sales fell. More than expected To avoid it appearing to be lower than expected, the SEC accused AT&T investor relations executives Christopher Womack, Michael Black and Kent Evans, calling analysts at 20 companies that disclosed the sale. Internally and how will it affect income?
AT&T shares were marginally negative in after-hours trading on Friday.
The SEC claims that internal documents make it clear that information is generally considered material to investors and cannot be disclosed, especially under the Regulation FD. In essence, it must be made public when shared with certain marketing experts and analysts to promote a certain level of playing field.
Based on those claims, the SEC claimed analysts had lowered their earnings estimates. That means consensus estimates ended up eventually falling below the figures AT&T reported this quarter, according to the complaint.
AT&T is set to drop more than $ 1 billion, well below the unanimous revenue estimate for the quarter before management’s claim, according to the complaint. The complaint alleges that AT & T’s CFO ordered the company’s Investor Relations department to “work” analysts with “too high” estimates of equipment.
The SEC claimed Black misrepresented in a private call with a publicly available analyst. The complaint claims that “Black knows or negligently that he is distorting the information he is sending to analysts as he follows AT&T consensus estimate calculations, which do not match the information he provided in the analyst call.”
In a lengthy statement after the complaint, AT&T said the case “Represents the exits of the SEC’s long-standing enforcement of the FD’s policy and is inconsistent with the testimony of everyone who participated in these discussions.”
The company went on to say that the data was discussed in the call with analysts. “It relates to a widely reported and industry-wide subsidy for new smartphone purchases, and the impact of this trend on smartphone upgrade rates and device revenue is unlikely.” Surprise Without device subsidies, fewer customers upgrade smartphones, resulting in lower device revenue. “
AT&T also said it made public that the drop in phone sales did not have a significant impact on revenue.
“The SEC’s pursuit of this matter will not protect investors and will serve only productive communication between companies and analysts, but what the SEC worries about when it is announced. FD regulations 20 years ago, ‘AT&T said in a statement. “Unfortunately, this creates an environment of uncertainty among public companies and analysts who conceal them.”
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