Updated: September 13, 2019
Status: Ongoing Case
On June 24, 2019, Labaton Sucharow and Pomerantz were appointed co-lead counsel in a securities class action lawsuit against AT&T and certain of its executives and directors. The action asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and U.S. Securities and Exchange Commission Rule 10b-5 promulgated thereunder, as well as claims under Section 11, 12, and 15 of the Securities Act of 1933. The action asserts claims on behalf of all persons or entities who: (a) acquired AT&T common stock pursuant or traceable to the SEC Form S-4 registration statement and prospectus issued in connection with AT&T’s June 2018 acquisition of and merger with Time Warner, Inc., and/or (b) purchased or otherwise acquired AT&T publicly traded securities during the period from September 21, 2016 through January 30, 2019, inclusive (the “Class Period”), and were damaged thereby.
The Complaint alleges that AT&T misled investors about the success of its video streaming product DirecTV Now and failed to disclose, among other things: (a) material information about how the product was being promoted and sold; (b) the high turnover, or churn, levels associated with product; and (c) the real risk that a significant percentage of the subscriber base would not renew after their promotional periods ended. It is alleged that AT&T depicted DirecTV Now as profitable and fast growing, when in reality it was riddled with technical problems, sold at below profitable levels, and that AT&T was able to report-growing subscriber numbers only through various improper sales practices. The complaint describes a sales environment where employees were under immense pressure to meet unrealistic sales quotas, as well as the widespread practice of employees creating fake DirectTV Now customer accounts. The Exchange Act claims in the complaint allege that these practices were encouraged by the Company and that as a result AT&T deceptively overstated its subscriber growth.
On October 24, 2018, AT&T's stock fell 8 percent as it reported a dramatic deceleration of DirecTV Now subscriber growth and made statements indicating that the product was unprofitable and subject to high customer turnover. Over the subsequent several months AT&T made additional statements further indicating the product had been a failure, resulting in further stock price decreases. On January 30, 2019, AT&T reported that subscriptions for DirecTV Now had declined by 267,000 customers, and the stock fell another 4.3 percent. Since then, AT&T has repeatedly reported declining DirecTV Now subscriber levels.
The case is In re AT&T/DirecTV Now Securities Litigation, No. 19-cv-2892 (S.D.N.Y.) Labaton Sucharow represents Steamfitters Local 449 Pension Plan.