Charter Communications paid $25 million over stock-buyback internal-control violations

Summary

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