Regulators with the Securities Exchange Commission (SEC) have charged AT&T with selectively disclosing information to analysts covering the U.S. telecom market, according to the Financial Times. The SEC claimed the calls were made by the company to avoid falling short of Wall Street’s forecasts over falling smartphone sales. The agency said the short fall could result in AT&T being $1 billion below estimates for the quarter. The filing quotes AT&T’s chief financial officer as instructing its investor relations department to “work the analysts who still have equipment revenue too high.”
AT&T pushed back with a public statement saying, “the SEC does not cite a single witness involved in any of these analyst calls who believes that material nonpublic information was conveyed to them. Tellingly,” the statement read, “after spending four years investigating this matter, The information discussed during these March and April 2016 conversations concerned the widely reported, industry-wide phase-out of subsidy programs for new smartphone purchases and the impact of this trend on smartphone upgrade rates and equipment revenue.”
The carrier said not only did they publicly disclose this trend on multiple occasions before the analyst calls in question, but also made clear the declining phone sales had no material impact on its earnings.
“Analysts and the news media frequently wrote about this trend and investors understood that AT&T’s core business was selling connectivity (i.e., wireless service plans), not devices, and that smartphone sales were immaterial to the company’s earnings,” the company said. “The SEC’s pursuit of this matter will not protect investors and instead will only serve to chill productive communications between companies and analysts.”
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