U.S. SEC charges AT&T, executives with leaking information to analysts
By Chris Prentice
WASHINGTON (Reuters) - The US Securities and Exchange Commission on Friday sued AT&T Inc and three senior executives for allegedly disclosing non-public information to research analysts to avoid violating quarterly expectations for 2016 will be undercut.
AT&T reportedly learned in March 2016 that a stronger-than-expected decline in smartphone sales in the first quarter would cause the company to fall short of analysts' estimates. As a result, the phone company's chief financial officer instructed investor relations staff to "keep the analysts busy" in order to lower their estimates, the SEC said in a lawsuit.
The SEC said investor relations executives Christopher Womack, Michael Black, and Kent Evans held private one-on-one meetings with analysts from approximately 20 companies and disclosed material non-public information in violation of securities laws.
AT&T denied the allegations in a lengthy statement published online, saying, "AT&T not only publicly announced this trend several times before the analyst in question called, but AT&T has also made it clear that the decline in phone sales had no significant impact on the result. " ""
The company also said its core business is selling cellular services and a drop in device revenue is not material for AT&T.
The lawyer for Womack, Black, and Evans did not immediately respond to requests for comment.
The SEC said the leaks caused analysts to downgrade their forecasts, allowing AT&T to post better-than-expected revenue when it announced its quarterly results on April 26, 2016. AT & T's share price rose 1.7% the next day.
The allegations would constitute a violation of regulations that prohibit companies from disclosing critical information to securities analysts without disclosing it to the public, the SEC said. The lawsuit was filed in Manhattan.
(Additional reporting by Eric Beech in Washington and Jon Stempel in New York; editing by Mohammad Zargham, David Gregorio and Sonya Hepinstall)
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