SEC charges AT&T and executives with disclosure violations

The Securities and Exchange Commission has charged AT&T, Inc. with repeatedly violating Regulation FD ("Fair Disclosure," 17 CFR Part 243), and three of its investor relations executives with aiding and abetting AT&T's violations, by selectively disclosing material nonpublic information to research analysts.

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 alleges that to avoid falling short of the consensus revenue estimate 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. 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, despite the fact that 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 further alleges that as a result of what they were told on these calls, the analysts substantially reduced their revenue forecasts, leading to the overall consensus revenue estimate falling to just below the level that AT&T ultimately reported to the public on April 26, 2016.

The SEC's complaint, filed in federal district court in Manhattan, alleges that AT&T violated Regulation FD and reporting provisions of the Securities Exchange Act of 1934, and that Womack, Evans, and Black aided and abetted those violations. The complaint seeks permanent injunctive relief and unspecified civil monetary penalties against each defendant.

• SEC press release