Charter Communications, Inc.

The U.S. Securities and Exchange Commission announced settled charges against Charter Communications, Inc. in November 2023 concerning internal accounting controls used for billions of dollars of company stock repurchases. Charter's board had authorized personnel to conduct stock buybacks through trading plans intended to conform to SEC Rule 10b5-1. Rule 10b5-1 can provide companies and individuals protection from insider-trading liability when transactions are established in advance and the person adopting the plan does not retain improper ability to alter trades afterward. According to the SEC, from 2017 through 2021 Charter used trading plans containing provisions internally described as "accordion" provisions. The SEC found that these provisions gave Charter personnel the ability to change the total dollar amounts available for stock repurchases and alter the timing of repurchases after the plans had already taken effect. The Commission found that Charter's internal accounting controls were insufficient to provide reasonable assurance that its stock-buyback transactions were executed in accordance with the board's authorization. The SEC stated that Charter conducted repurchases worth billions of dollars using plans containing these provisions. The Commission charged Charter with violating internal accounting controls requirements of the Securities Exchange Act. Without admitting or denying the SEC's findings, Charter consented to a cease-and-desist order and agreed to pay a $25 million civil monetary penalty. Primary sources: U.S. Securities and Exchange Commission — Charter Communications to Pay $25 Million Penalty for Stock Buyback Controls Violations: https://www.sec.gov/newsroom/press-releases/2023-235 SEC Administrative Order: https://www.sec.gov/files/litigation/admin/2023/34-98923.pdf

The U.S. Securities and Exchange Commission instituted settled administrative proceedings against Charter Communications, Inc. in July 2004 concerning accounting and operating practices used to portray stronger subscriber growth. The SEC found that during the first through fourth quarters of 2001 Charter inflated the number of customers reported as subscribing to its services. According to the Commission, the purpose was to help Charter meet analysts' expectations for subscriber growth and portray the company as growing. One method involved changing Charter's normal disconnection practices. The SEC found that Charter employees stopped the company's usual practice of disconnecting service to customers who were delinquent in paying their bills. Charter also stopped disconnecting certain customers who had specifically requested termination of their services. Keeping those accounts connected allowed Charter to continue counting them within reported subscriber numbers. The SEC enforcement action addressed additional accounting and internal-control issues connected with Charter's financial reporting and business practices. The Commission ordered Charter to cease and desist from committing or causing future violations of specified reporting, books-and-records and internal-accounting-control provisions of federal securities law. In determining the appropriate resolution, the SEC stated that it considered remedial actions undertaken by Charter and the company's cooperation with Commission staff. Charter settled the administrative proceeding without admitting or denying the SEC's findings, except as to jurisdiction. Primary source: U.S. Securities and Exchange Commission — In the Matter of Charter Communications, Inc., Exchange Act Release No. 50098: https://www.sec.gov/enforcement-litigation/administrative-proceedings/34-50098