A U.S. judge on Thursday rejected AT&T Inc’s (T.N.) bid to dismiss an unusual Securities and Exchange Commission lawsuit accusing the phone company of selectively leaking financial information to Wall Street analysts.
In a 129-page decision, U.S. District Judge Paul Engelmayer in Manhattan said he found “formidable” evidence that AT&T investor relations executives disclosed material nonpublic information to analysts, and did so with an intent to defraud.
AT&T and the executives were accused of telling select analysts in March and April 2016 that smartphone sales would cause overall revenue to miss analyst forecasts.
The SEC said the goal was for the analysts to lower their revenue forecasts before Dallas-based AT&T reported results, so that the results would meet or exceed the reduced forecasts and avoid disappointing investors.
Eliminating selective disclosures had been an SEC goal when in 2000 it adopted Regulation FD, or fair disclosure. The SEC said AT&T’s disclosures violated that regulation.
AT&T and the SEC did not immediately respond to requests for comment. CNBC