For the first time, a Regulation Fair Disclosure (Reg FD) case may be headed to trial. On September 8, 2022, the Federal District Court for the Southern District of New York denied cross-motions for summary judgment in a case brought by the Securities and Exchange Commission (SEC) against AT&T, Inc. and three individuals who worked in the company’s Investor Relations (IR) Department. SEC v. AT&T, et al., Opinion and Order, 21 Civ. 1951 (PAE) (SDNY Sept. 8, 2022) (Order). Reg FD prohibits public companies from selectively disclosing material nonpublic information (MNPI) to certain individuals or entities—including Wall Street analysts. The SEC has alleged that, in early 2016, members of AT&T’s IR Department systematically leaked MNPI to analysts in an effort to have those analysts reduce their estimates of AT&T’s Q1 2016 revenue. The Court’s analysis—particularly when rejecting defendants’ request for summary judgment on the issue of materiality—provides some important takeaways for issuers to consider.
‘Enforcement 40’ for 2020
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