SEC found Charter Communications inflated subscriber numbers to meet growth expectations

Summary

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