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The Securities and Exchange Commission is suing AT&T and three of its investor relations executives for telling Wall Street analysts about the telecom giant’s sales data before releasing quarterly results.
The early warning helped AT&T to keep its results from falling short of Wall Street expectations, according to the SEC complaint filed in Manhattan federal court.
The U.S. financial regulator said on Friday that, in March 2016, AT&T was concerned that a more pronounced than expected decline in smartphone sales would cause it to lose Wall Street estimates for the first quarter.
| Ticker | Safety | Last | Change | Change % |
|---|---|---|---|---|
| T | AT&T, INC. | 29.63 | +0.71 | + 2.46% |
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Companies that report results that fall short of analysts’ forecasts may suffer a liquidation of their shares.
AT&T’s chief financial officer told the investor relations department to “work” with analysts who had very high estimates for the company’s quarterly equipment revenue, according to the government’s complaint.
AT&T investor relations executives, Christopher Womack, Michael Black and Kent Evans, called Wall Street analysts at about 20 companies in particular to talk about internal smartphone sales data and the impact it would have on their metrics of revenue, which the government said were not public, “material” information told in violation of securities laws.
The SEC is suing AT&T and three of its investor relations executives for telling Wall Street analysts about the telecommunications giant’s sales data before releasing quarterly results. (AP Photo / Mark Lennihan, Archives)
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Analysts subsequently cut their revenue forecasts due to what they were told on the calls before AT&T reported its first quarter results in April 2016, according to the complaint, and AT&T’s revenue surpassed the Wall Street consensus for the quarter .
Dallas-based AT&T said in a statement that it did not tell analysts “relevant nonpublic information” and that it will fight the process. The company said it “made it clear that the drop in phone sales had no significant impact on its earnings”.