Charter Communications Agrees To Pay $25 Mln Penalty For Unauthorized Stock Buybacks

(RTTNews) - Charter Communications Inc. (CHTR) agreed to pay a civil penalty of $25 million for violating internal accounting controls requirements relating to its stock buybacks, the U.S. Securities and Exchange Commission said in a statement.

According to the SEC's order, Charter's board authorized company personnel to conduct certain buybacks using trading plans that conform to SEC Rule 10b5-1. The Rule offers protection to companies and individuals from insider trading liability as long as they meet the conditions of the rule, including a requirement that they not retain the ability to change the planned purchases or sales after they adopt the trading plan.

However, the SEC's order found that, from 2017 to 2021, Charter used plans that included "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, because Charter's trading plans did not meet the conditions of Rule 10b5-1, the company's buybacks did not comport with the board's authorizations.

The SEC's order found that Charter included accordion provisions in nine separate trading plans over the four-year period.

The SEC's order found that Charter's repeated use of trading plans that did not conform to Rule 10b5-1 was the result of 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 authorization.