| AT&T Was
Charged With Spinning Stock Analysts About
Upgrades Now SJ Denied
By Matthew
Russell Lee, Patreon
BBC
- Guardian
UK - Honduras
- ESPN
SDNY COURTHOUSE,
Sept 8 – 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
and below.
On September 8,
Judge Engelmayer denied
AT&T's and the SEC's
motions for summary judgment,
calling this a rare such case
that it heading to trial. From
the decision:
From May 28: 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 December 1,
Judge Engelmayer entered an
amended case management plan,
with motions due by May
3, expert discovery by April
15.
On March 22,
2022, yet another schedule:
"This Third Amended Civil Case
Management Plan Order... Any
joint stipulations of fact for
summary judgment shall be
filed by April 26, 2022. Any
motions for summary judgment
shall be made by the moving
party on or before May 3,
2022, with any opposition
filed by May 20, 2022 and any
reply filed by May 31, 2022.
May 3, 2022 shall be the
deadline to file any motion to
strike experts. May 20, 2022
shall be the deadline to file
responses to any motions to
strike experts. May 31, 2022
shall be the deadline to file
any replies to any motions to
strike experts. Counsel for
the parties have conferred and
their present best estimate of
the length of trial is 15
days. (Signed by Judge Paul A.
Engelmayer on 3/22/2022)."
Inner City Press
will continue to report on
this case.
The three
individual defendants are
Christopher C. Womack, Kent D.
Evans and Michael J. Black.
The case is
Securities and Exchange
Commission v. AT&T Inc. et
al., 21-cv-1951
(Engelmayer)
***
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