The Securities and Exchange Commission announced settling charges against Charter Communications Inc. (NASDAQ:CHTR) for breaches in stock buyback accounting controls.
Although Charter’s board allowed buybacks under SEC Rule 10b5-1, which guards against insider trading if certain conditions are met, from 2017 to 2021, Charter deviated from these rules.
They employed “accordion” provisions in their plans, granting flexibility to alter buyback amounts and timing.
This practice, employed in nine different plans over four years, didn’t comply with Rule 10b5-1’s stipulations, leading to buybacks that weren’t in line with board approvals.
The SEC concluded that Charter’s non-compliance with Rule 10b5-1, evident in their repeated misaligned trading plans, stemmed from inadequate internal accounting controls.
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Charter breached Section 13(b)(2)(B) of the Exchange Act, agreeing to a cease-and-desist order and a $25 million fine without admitting or denying the findings.
In a statement, Charter affirmed its full cooperation with the SEC investigation and stated its share buyback plans were thoroughly documented and disclosed.
The company reiterated its commitment to its share repurchase program and existing leverage goals, as reported by Reuters.
Price Action: CHTR shares are trading lower by 2.03% at $406.41 premarket on the last check Wednesday.
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