| AT&T Was
Charged With Spinning Stock Analysts About
Upgrades Now SJ Motions
By Matthew
Russell Lee, Patreon
BBC
- Guardian
UK - Honduras
- ESPN
SDNY COURTHOUSE,
March 3 – AT&T and
executives in its Investor
Relations department have been
sued by the SEC for selective
disclosures to stock analysts
at 20 Wall Street firms, in
alleged violation of
Regulation
FD.
On May 28, U.S.
District Court for the
Southern District of New York
Judge Paul A. Engelmayer held
a proceeding. Inner City
Press live tweeted it, here:
now a "reverse
insider trading" case SEC v.
AT&T Inc. et al,
21-cv-01951.
SEC says AT&T
massaged stock analysts to
lower their estimates, to not
have to put out an 8-K. SEC
says it will depose current
AT&T CEO. Inner City Press
will live tweet, thread below
Matthew Russell Lee and 5
others
SEC lawyers
says the IR department in
AT&T decided to try to
lower analysts' estimates by
calling them one by one, to
not be viewed as
under-performing the
estimates.
Judge Engelmayer
calls it "bleeding out" the
information. SEC agrees with
the characterization. ]
Judge Engelmayer:
What about document
collection?
SEC: We got
a number of documents but the
scope of the periods, as goes
to materiality, may extend...
So we'll ask for more, to
address their defenses. We
think they'll hire experts. We
too have hired experts.
Judge Engelmayer:
What about discovery aimed at
third parties like the
analysts? SEC: Yes we have
production from these
broker-dealers. AT&T says
the analysts don't support our
case. Some of the info we
teased out in the Wells
process disputes that...
SEC:
We find that the analysts are
very close to the I.R.
department. This is where
there access is. They don't
want to go against them. Judge
Engelmayer: AT&T?
Richard Samson
Krumholz representing
AT&T: The SEC is
criticizing truthful
communications.
Krumholz
for AT&T: No one has
testified than any material
non-public information was
shared. These were not
material metrics, and they
were already public: upgrade
rates, purchase of new phones.
AT&T doesn't make phones.
We're in the wireless business
AT&T: There
was no startle value in the
stock price. So the notion of
the motive suggested by
counsel is not accurate. None
of the analysts though, Oh my
God, we need to go to our
compliance department.
Judge Engelmayer:
Have you received discovery
from the SEC? AT&T:
We were allowed to come to
their office and review
transcripts and take notes. We
were provided some of the
analysts' testimony. We've
seen snippets of analysts'
notes. I wasn't that involved
in that process.
Judge Engelmayer:
So what is the scienter
requirement?
AT&T:
Recklessness. So we don't
believe this is even a close
call under Reg FD. 17 CFR
240...
Judge
Engelmayer: Did you represent
AT&T during the
investigatory or Wells
process? Lawyer: It wasn't me.
Judge
Engelmayer: I think the
proposed fact discovery period
is too long.
On March 3, 2022
Judge Engelmayer teed up
summary judgment motions:
"MEMO ENDORSEMENT on re: [64]
Letter filed by AT&T Inc.
ENDORSEMENT: The Court has
received letters from
plaintiff SEC, Dkt. 62, the
individual defendants, Dkt.
63, and the corporate
defendant, AT&T, Dkt. 64,
each indicating an intention
to move for summary judgment.
The case management conference
scheduled for March 17, 2022
at 2 p.m. will serve as a
pre-motion conference. At that
conference, the Court will
also set a due date for the
submission of a Joint
Statement of Facts ("JSF")
setting out in detail the
facts to which the parties all
stipulate. See Individual Rule
3.H.i. The Court expects that
the JSF will be due in
mid-April. By email, the
Court's law clerk will send
counsel examples of JSFs
submitted in advance of
summary judgment motions in
prior cases."
Inner City Press
will continue to report on
this case.
The case is
Securities and Exchange
Commission v. AT&T Inc. et
al., 21-cv-1951
(Engelmayer)
***
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