SEC Charges AT&T and Three Executives with Regulation FD Violations | Practical Law

SEC Charges AT&T and Three Executives with Regulation FD Violations | Practical Law

The SEC charged AT&T and three executives with violations of Regulation FD for selectively disclosing material nonpublic information to research analysts.

SEC Charges AT&T and Three Executives with Regulation FD Violations

Practical Law Legal Update w-030-0507 (Approx. 3 pages)

SEC Charges AT&T and Three Executives with Regulation FD Violations

by Practical Law Corporate & Securities
Published on 10 Mar 2021USA (National/Federal)
The SEC charged AT&T and three executives with violations of Regulation FD for selectively disclosing material nonpublic information to research analysts.
Update: On December 5, 2022, the SEC announced AT&T and the three executives agreed to pay monetary penalties to settle the charges for violations of Regulation FD.
On March 5, 2021, the SEC announced charges against AT&T, Inc. (AT&T) and three of its investor relations executives for repeatedly violating Regulation FD (Fair Disclosure) by selectively disclosing material nonpublic information to research analysts.
Regulation FD is a set of rules adopted in 2000 in response to a practice where companies provided information to securities analysts and selected institutional investors before they released it to the general public. The rules provide that no covered person can disclose material nonpublic information to market professionals or securityholders unless such information is simultaneously made public.
The SEC's complaint alleges that AT&T learned in March 2016 that its revenues would fall short of analyst estimates due to smartphone sales declining more than expected in the first quarter. In response, AT&T investor relations executives made a series of one-on-one calls to analysts at approximately 20 firms, during which the executives allegedly disclosed internal data and its impact on revenue metrics even though such information was generally considered to be material. The analysts then subsequently adjusted their revenue forecasts for AT&T, leading to an overall consensus revenue estimate falling to just below the level that AT&T ultimately reported publicly in April 2016.
The SEC's press release reiterates its stance that Regulation FD is designed to "level the playing field" for all investors. In response to the charges, AT&T released a statement disputing the SEC's allegations.
For more information on Regulation FD, see Practice Note, Complying with Regulation FD (Fair Disclosure), and Standard Document, Regulation FD Policy. For more on the disclosure of nonpublic information, see Practice Note, Disclosing Nonpublic Information.