AT&T Inc. (T) Accused of Filing False Registration Statements

According to the complaint against the company for alleged securities law violations relating to the company’s registration statement issued in connection with the acquisition and merger with Time Warner in June 2018, and the for misrepresentations made between October 22, 2016 and October 24, 2018, AT&T Inc. (T) issued over a billion new shares of common stock to former shareholders of Time Warner common stock in connection to the acquisition. However, AT&T failed to disclose that its registration statement contained false and/or misleading material facts. Principally, the registration statement touted yearly and quarterly growth trends in AT&T’s Entertainment Group segment, including quarterly subscriber gains in its DirecTV Now service sufficient to offset any decrease in traditional satellite DirecTV subscribers. In truth, AT&T had raised prices and discontinued promotional discounts for its DirecTV Now service. As a result, existing DirecTV Now subscribers were leaving and potential customers were unwilling to pay the substantially increased prices. The truth was revealed when AT&T announced 3Q2018 results and announced a 297,000 total subscriber net loss.  On this news, AT&T shares suffered sharp declines and fell nearly 12% to close at $29.09 per share.