Another AT&T Shareholder Alleges Securities Fraud for Lead Cables Coverup

Another shareholder derivative lawsuit seeks to hold AT&T’s current and former CEOs and chief financial officers, plus 12 current and former board members, accountable for allegedly covering up between March 2020 and July 27, 2023, what they knew about the existence and prevalence of toxic lead cables in AT&T’s possession, in violation of the Securities Exchange Act. The latest suit over legacy lead cables joins others filed in recent months against AT&T and Verizon (see 2308020046).

The individual defendants “participated in schemes to defraud with the purpose and effect of defrauding AT&T,” alleged Thursday's complaint (docket 1:24-cv-00032) from George Miller, a shareholder since April 2017, in U.S. District Court for Delaware in Wilmington. The company itself is “one of the largest victims of the unlawful schemes,” it said.

With AT&T shares trading at artificially inflated prices due to the defendants’ misconduct, the defendants caused AT&T to buy back more than 100 million of its own shares at those same artificially inflated prices, damaging the company, said the complaint. The defendants’ list includes William Kennard, AT&T board chairman since January 2021 and former FCC chairman under President Bill Clinton.

Throughout the relevant period, the defendants made materially false or misleading statements “and failed to disclose material adverse facts about AT&T’s business, operations, and prospects,” said the complaint. The defendants specifically failed to disclose that AT&T owns cables throughout the U.S. that are covered in toxic lead, posing harm to its employees and the public, it said.

The defendants also failed to disclose that the lead cables “were degrading and leaching into the environment,” said the complaint. AT&T faces “potentially significant risks of litigation, regulatory enforcement and penalties, and reputational harm,” it said. The telco “knew about the damage and risks presented by its lead cables but failed to disclose them as a possible threat to employee and community safety,” it said.

The individual defendants also “breached their fiduciary duties” by failing to correct their false and misleading statements and omissions of material fact to the “investing public,” said the complaint. They further breached their fiduciary duties by causing AT&T to repurchase its own stock at artificially inflated rates. The complaint alleges the company overpaid by more than $1.7 billion through July 27 to buy back 124 million shares.