AT&T Faces SEC Charges for Alleged Illegal Manipulation of Analyst Forecasts

AT&T and three of its executives are facing a lawsuit from the Securities and Exchange Commission. The lawsuit accuses the company and its top brass of leaking non-public data to manipulate analysts’ revenue forecasts. This leaked information drove revenue predictions down, allowing AT&T to beat estimates in the first quarter of 2016.

Filed last week in the US District Court for the Southern District of New York, the complaint claims AT&T violated the Regulation FD for fair disclosure clause that is contained in the Securities Exchange Act of 1934.

A press release from the SEC details the charges against the wireless carrier.

“Regulation FD levels the playing field by requiring that issuers disclosing material information do so broadly to the investing public, not just to select analysts. AT&T’s alleged selective disclosure of material information in private phone calls with analysts is precisely the type of conduct Regulation FD was designed to prevent.”

Richard R. Best, Director of the SEC’s New York Regional Office.

AT&T is accused of releasing material information on smartphone sales only to investors and not to the general public, which Regulation FD prohibits.

Armed with this information, analysts then substantially adjusted their revenue forecasts downward. When AT&T finally released its financial data on April 26, 2016, the wireless carrier narrowly beat the analyst’s revised estimates.

AT&T is listed in the complaint as well as AT&T Investor Relations executives Christopher Womack, Michael Black, and Kent Evans, who allegedly aided and abetted in this violation.

According to the complaint, Womack, Evans, and Black shared internal sales data in private calls to analysts at approximately 20 different firms.

The complaint seeks permanent injunctive relief and civil monetary penalties against the wireless carrier and the three executives involved in this scheme.