AT&T has been sued by the SEC for allegedly disclosing nonpublic information to analysts in 2016

• AT&T was accused of revealing nonpublic data to avoid missing analysts' revenue estimates in 2016.
• The SEC is seeking permanent injunctive relief and civil monetary penalties against each defendant.
• AT&T said that the allegations it revealed material information are "meritless."

The Securities and Exchange Commission filed a lawsuit against AT&T and three of its investor relations executives for allegedly revealing nonpublic information to analysts to avoid missing revenue estimates in 2016.

The SEC filed the lawsuit in a federal court in Manhattan on Friday, and said in the complaint that AT&T violated Regulation FD, which requires that firms disclosing material information do so broadly to the investing public, not just to select people.

The SEC is seeking permanent injunctive relief and civil monetary penalties against each defendant.

AT&T didn't respond to Insider's request for comment but maintains the SEC claims are meritless.

"We look forward to having our 'day in court' to demonstrate conclusively that our investor relations employees complied with Regulation FD, and that the allegations in the SEC's complaints are meritless," AT&T said in a statement in response to the allegations.

The SEC argues that AT&T knew that it could miss analysts' revenue estimates for its first-quarter in 2016 due to its larger-than-expected decline in its smartphone sales. To avoid missing estimates for the third consecutive quarter, the company's investor relations executives, Christopher Womack, Michael Black, and Kent Evans, privately called analysts in around 20 separate firms, the SEC said.

During the phone calls, all three executives allegedly shared AT&T's internal smartphone sales data and its impact on internal revenue metrics.

Following those calls, analysts reduced their revenue forecasts which led to a slightly lower overall revenue estimate than the one the company reported in April 2016, according to the SEC complaint.

AT&T said that there wasn't any material disclosure made, and cited the lack of any market reaction to the company's first-quarter results in 2016.

The company added that the material discussed was about the impact of removing subsidy programs on smartphone upgrade rates. Those subsidy programs allowed customers to upgrade their phones and without them, they were buying phones less frequently which as a result reduced equipment revenue.

AT&T said it disclosed this trend on multiple occasions and clarified that it will not impact its earnings.

The telecommunications company has been hit with other lawsuits since the beginning of 2021.

Last month, Washington D.C. Attorney General Karl Racine sued AT&T Mobility National Accounts for charging the city huge sums of money for cellphone and internet services when it was contractually supposed to provide the city the cheapest services available, Reuters reported. The company responded saying that the allegations were "entirely without merit."

In January, Seattle company Network Apps LLC filed a lawsuit against AT&T accusing the company of patent theft of a technology that allows smart devices to respond to calls assigned to one phone number, Reuters reported. The company is facing a potential payout of at least $1.35 billion. AT&T said it would review the lawsuit and respond in court.