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AT&T to pay penalty for tipping off Wall Street


An American multinational telecommunications company agreed to pay a record penalty of $6.25 million for selectively disclosing information to a number of Wall Street analysts.

AT&T and its three executives were charged by the Securities and Exchange Commission (SEC) in March 2021. According to the 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.

To avoid falling short of consensus revenue expectations, the company's investor relations executives Christopher Womack, Michael Black, and Kent Evans made private, one-on-one phone calls to analysts at approximately 20 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," SEC said.

SEC assessed that because of those calls, analysts substantially reduced 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."

AT&T agreed to pay a $6.25 million penalty – the largest in a Regulation FD case ever. Three company executives will pay $25,000 apiece.


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