Stamford-based Charter Communications (NASDAQ:CHTR) has reached a $25 million settlement with the U.S. Securities and Exchange Commission (SEC) to resolve charges that it violated internal accounting controls requirements relating to its stock buybacks.
The SEC’s alleged that between 2017 to 2021, Charter used strategies including “accordion” provisions – which company personnel described as giving Charter flexibility – that allowed Charter to change the total dollar amounts available to buy back stock and to change the timing of buybacks after the plans took effect. According to the SEC’s order, Charter’s trading plans ran afoul of SEC Rule 10b5-1 regarding stock buybacks, which was designed to provide protection to companies and individuals from insider trading liability.
The SEC’s stated that Charter included accordion provisions in nine separate trading plans over the four-year period. The agency blamed the situation on “the company’s insufficient internal accounting controls, in particular, its absence of reasonably designed controls to analyze whether the discretion the accordion provisions gave executives to alter the company’s trading was consistent with the board’s authorizations.”
In accepting the settlement, Charter is not required to formally acknowledge wrongdoing.
In a statement to the Business Journal, Charter noted that two SEC commissioners disagreed with the decision to penalize Charter. The company responded to the settlement by saying, “Charter has concluded this matter and is pleased to avoid the expense and distraction of a dispute with the SEC, and Charter fully cooperated in the SEC’s inquiry. Charter’s share repurchase plans, were well documented, and were fully disclosed as well as properly accounted for in Charter’s financial statements. The Order does not require Charter to cease repurchasing its stock, and we remain committed to a share buyback program and our previously stated leverage targets.”
