AT&T 10b-5 Class Action
Analysis Group was retained by Sidley Austin Brown & Wood, counsel for AT&T, in a 10b-5 securities class action suit. Shareholders of the company alleged that AT&T and its former chief executive had provided misleading guidance on financial results for the 2000 fiscal year in order to maintain the stock price in advance of an initial public offering for AT&T’s wireless unit. Analysis Group academic affiliate Professor George Foster provided economic analysis and deposition testimony regarding the reasonableness of AT&T’s financial guidance. Professor Foster analyzed company-specific data from AT&T’s budgetary and forecasting systems to determine if these systems were designed properly to provide reasonable estimates. His analysis also included the impact of external factors on AT&T’s forecasting, such as the overall health of the marketplace as of late 1999, when the projections were made, which was prior to the market downturn that began later in 2000; review of industry analyst reports; and past budgets and budgetary mechanisms of AT&T.
In addition to Professor Foster’s testimony, academic affiliate William Lehr, Associate Director of MIT's Program on Internet and Telecoms Convergence, provided a report and deposition testimony regarding the market conditions for telecommunications beginning in the late 1990s.
As reported in The Wall Street Journal, the plaintiffs had sought $2.4 billion in damages, but the case was settled for $100 million after three weeks of trial. Bruce Deal, Managing Principal in Menlo Park, California, managed the Analysis Group case team.