The U.S. Securities and Exchange Commission and AT&T announced late Friday they have agreed to settle a lawsuit that accused the Dallas-based telecom giant of selectively leaking confidential financial information to Wall Street analysts in hopes of potentially manipulating revenue projections during the first quarter 2016.
Lawyers for AT&T – many of them from Dallas – negotiated a $6.25 million settlement with the SEC, which sued the telecom giant in March 2021 for “selectively disclosing material nonpublic information to research analysts” in March 2016 regarding “steeper-than-expected” declines in the sales of its smartphones.
The SEC claimed that AT&T and three of its investor relation executives – Christopher Womack, Michael Black and Kent Evans – made one-on-one phone calls to specific financial analysts at 20 different investment firms to inform them of the expected revenue miss in Q1 2016. As a result of those calls, the analysts reduced their revenue estimates for AT&T that quarter, court documents show.
Legal experts said the SEC’s complaint against AT&T was considered the first of its kind ever brought by the federal agency. AT&T faced up to $20 million in penalties and the individual AT&T executives faced $1 million each.
As part of the agreement, the company will pay $6.25 million and the individuals will each pay $25,000. Despite paying $6.25 million, AT&T does not admit nor deny the allegations against it, according to court documents.
The AT&T legal defense team was led by AT&T assistant general counsel Joseph Tocco and senior counsel Natalie Hall. AT&T turned to Norton Rose Fulbright partner Richard Krumholz as the company’s lead outside counsel. Other Norton Rose Fulbright lawyers involved include Austin partner Peter Stokes and Houston partner Rachel Roosth.
Dallas trial lawyer Jeff Tillotson was the lead attorney for Womack, Black and Evans. Other Tillotson Johnson & Patton lawyers involved include Jonathan Patton, Anne Johnson and Charles Rice. Benjamin Breckler of Haynes and Boone also represented the defendants.
Lawyers in the New York and Washington, D.C., offices of Willkie Farr also represented AT&T.
The enforcement lawyers for the SEC were based in New York.