OPINION & ORDER This case is a rare litigated enforcement action brought by the Securities and Exchange Commission (“SEC”) arising out of the SEC’s Regulation FD-Fair Disclosure (“Regulation FD” or “Reg FD”). See 17 C.F.R. §243. Promulgated in 2000, Reg FD prohibits a public company from selectively disclosing material nonpublic information (“MNPI”) about itself or its securities to certain persons outside the company, unless it also discloses that information to the public. The SEC here sues the public telecommunications company AT&T, Inc. (“AT&T”), and three members of its Investor Relations (“IR”) Department: Christopher C. Womack, Kent D. Evans, and Michael J. Black (the “individual defendants” or the “IR defendants,” and, together with AT&T, “defendants”). The SEC alleges that in March and April 2016, AT&T embarked on a campaign to selectively disclose MNPI to analysts at 20 Wall Street firms. As alleged, AT&T’s goal was to “manage” those analysts to reduce their estimates of AT&T’s first quarter of 2016 (“Q1 2016″) total revenue, to enable AT&T to beat the consensus revenue estimate for that quarter. AT&T had missed consensus revenue estimates in two of the three preceding quarters, and by March 2016, analysts’ consensus revenue estimate exceeded AT&T’s internal estimates by more than $1 billion. The SEC alleges that, acting at the direction of AT&T’s chief financial officer and IR Director, defendants Womack, Evans, and Black, in calls to analysts, selectively disclosed MNPI that caused numerous analysts to significantly reduce their Q1 2016 revenue estimates. This scheme, as alleged, succeeded; AT&T’s total revenue, as announced, exceeded analysts’ final consensus revenue estimate by 0.1 percent . The internal data that AT&T selectively disclosed, as alleged, included the company’s projected or actual total revenue, and internal metrics bearing on total revenue, including wireless equipment revenue and wireless equipment upgrade rates. On this basis, the SEC brings a claim against AT&T under Section 13 of the Securities and Exchange Act of 1934, 15 U.S.C. §78a et seq., for violating Reg FD, and claims against Womack, Evans and Black for aiding and abetting that violation. Following extensive fact and expert discovery, all parties have now moved for summary judgment on all claims. Both have also moved to exclude evidence. These motions, although in the nature of motions in limine, were appropriately made at this stage, given the possibility that the exclusion of evidence might affect the summary judgment analysis. To this end, each side moves to exclude the testimony of the other’s proposed experts, under Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579 (1993). And the defense moves to exclude notes of analysts whom defendants contacted, arguing that these are inadmissible hearsay. For the reasons set out in this decision, the Court denies both sides’ summary judgment motions. To the extent defendants argue that Regulation FD is invalid — as violative of the First and Fifth Amendments; outside the SEC’s authority to promulgate; or logically inoperable — these challenges are unconvincing. To the extent defendants argue that the SEC has failed to come forward with sufficient evidence to support its claims, that, too, is wrong. The SEC has adduced sufficient evidence on each disputed element: to wit, that the information at issue was (1) material, (2) nonpublic, and selectively disclosed (3) with scienter. The evidence is, in fact, formidable that the information that the individual defendants selectively disclosed about AT&T in their calls to analysts was both material and nonpublic. And, although the balance of the evidence on the scienter element is closer, the SEC has adduced sufficient evidence on which a reasonable jury could find for the SEC on that element, too, to wit, that Womack, Evans, and Black knew that — or were at least reckless about whether — the information they were selectively feeding analysts was material and nonpublic, in violation of Reg FD. At the same time, summary judgment cannot be entered for the SEC. A reasonable jury could find for the individual defendants, at a minimum, on the element of scienter. And because AT&T’s liability, as charged by the SEC, appears based on that of the individual defendants, summary judgment cannot be entered against AT&T, either. Barring settlement, the SEC’s claims therefore must be resolved at trial. As to the evidentiary motions, the Court denies defendants’ motion to globally strike the analysts’ notes. Subject to document — or excerpt-specific objections that the Court will take up closer to trial, these are, in the main, admissible as non-hearsay and under hearsay exceptions. The Court does not, and need not, resolve today the parties’ Daubert motions. Regardless of how these were resolved, there would be sufficient evidence of each element to reach a jury, and a material dispute of fact on at least the scienter element. The Court denies these motions, without prejudice to the parties’ right to raise the same or similar motions closer to trial. I. Factual Background1 A. Regulation FD Reg FD was promulgated in 2000 to fill a gap in federal securities laws with respect to the selective disclosure by public companies of material nonpublic information. In promulgating the regulation, the SEC explained that where such information is selectively disclosed, it “leads to a loss of investor confidence in the integrity of our capital markets.” Final Rule: Selective Disclosure and Insider Trading, SEC Release No. 7881, 2000 WL 1201556, at *2 (Aug. 15, 2000) (“Adopting Release”). Selective disclosure, the agency added, “bears a close resemblance…to ordinary ‘tipping’ and insider trading,” in that it enables “a privileged few [to] gain an information edge — and the ability to use that edge to profit — from their superior access to corporate insiders, rather than from their skill, acumen, or diligence.” Id. The regulation was also intended to prevent issuers from using “material information as a commodity to be used to gain or maintain favor with particular analysts or investors.” Id. Reg FD provides, in relevant part: Whenever an issuer, or any person acting on its behalf, discloses any material nonpublic information regarding that issuer or its securities to any person described in paragraph (b)(1) of this section, the issuer shall make public disclosure of that information…(1) Simultaneously, in the case of an intentional disclosure; and (2) Promptly, in the case of an non-intentional disclosure. 17 C.F.R. §243.100(a). Reg FD applies to a disclosure made to any person outside the issuer, including: a broker or dealer, investment adviser, institutional investment manager, and anyone who holds the issuer’s securities “under circumstances in which it is reasonably foreseeable that the person will purchase or sell the issuer’s securities on the basis of that information.” Id. §243.100(b)(1). Reg FD does not apply, however, to disclosures made to “a person who owes a duty of trust or confidence to the issuer (such as an attorney, investment banker, or accountant),” “a person who expressly agrees to maintain the disclosed information in confidence,” or, in certain circumstances, when the disclosure is made in connection with a securities offering. Id. §243.100(b)(2). Reg FD’s Adopting Release addressed the material nonpublic information to which the regulation applied. The regulation, it stated, “does not define” such terms, but “relies on existing definitions of these terms established in the caselaw.” Adopting Release, 2000 WL 1201556, at *9. In the decades since Reg FD’s issuance, the SEC has enforced the regulation relatively sparingly, focusing enforcement action on more serious asserted violations of Reg FD. As the Director of the SEC’s Enforcement Division explained when the agency first issued the rule, the SEC did not intend “to test the outer limits of the rule by bringing cases that aggressively challenge the choices issuers are entitled to make regarding the manner in which a disclosure is made.” Richard H. Walker, Director, Div. of Enf’t, S.E.C., Regulation FD — An Enforcement Perspective (Nov. 1, 2000), available at https://www.sec.gov/news/speech/spch415.htm. Instead, the SEC intended to “be on the lookout for two types of violations. The first are egregious violations involving the intentional or reckless disclosure of information that is unquestionably material….” The second are “cases against those who deliberately attempt to game the system.” Id. Consistent with that philosophy, the SEC has pursued claims under Reg FD against a relatively limited number of public companies and/or executives, with such actions almost invariably resulting in settlement. See, e.g., In re TherapeuticsMD, Inc., Exchange Act Release No. 86708, 2019 WL 3933685 (Aug. 20, 2019) ($200,000 civil penalty for Reg FD violation); S.E.C. v. Brian Pappas et al., Litig. Release No. 23914, 2017 WL 3614292 (Aug. 22, 2017) (imposing officer-and-director and penny stock bars and requiring approximately $71,000 in disgorgement, interest, and penalties); In re Lawrence D. Polizzotto, Exchange Act Release No. 70337, 2013 WL 4773958 (Sept. 6, 2013) ($50,000 penalty); S.E.C. v. David Ronald Allen et al., Litig. Release No. 22208, 2011 WL 10915927 (Dec. 22, 2011) (settlements and injunctions entered against numerous defendants); In re Fifth Third Bancorp, Exchange Act Release No. 65808, 2011 WL 5865859 (Nov. 22, 2011) (entering cease-and-desist order but not imposing penalties, in part based on cooperation with SEC investigation); S.E.C. v. Office Depot, Inc., Litig. Release No. 3199, 2010 WL 4134972 (Oct. 21, 2010) ($1 million civil penalty); In re Patricia A. McKay, Exchange Act Release No. 63154, 2010 WL 4134969 (Oct. 21, 2010) ($50,000 settlement for CFO in Office Depot action, supra); In re Stephen A. Odland, Exchange Act Release No. 63153, 2010 WL 4134968 (Oct. 21, 2010) ($50,000 settlement for CEO in Office Depot action, supra); S.E.C. v. Presstek, Inc. et al., Litig. Release No. 21443, 2010 WL 784231 (Mar. 9, 2010) ($400,000 civil penalty); S.E.C. v. Christopher A. Black, Litig. Release No. 21222, 2009 WL 3047574 (Sept. 24, 2009) ($25,000 penalty for CFO; declining to bring an enforcement action against corporation that promptly and publicly disclosed selective disclosure and cooperated extensively); S.E.C. v. Srinivasan, Litig. Release No. 20296, 2007 WL 2778650 (Sept. 25, 2007) ($70,000 penalty for company’s former president; consent entry of cease-and-desist order against company, providing for disgorgement and prejudgment interest of $490,902); In re Flowserve Corp. et al., Exchange Act Release No. 51427, 2005 WL 677810 (Mar. 24, 2005) (final judgment in action in the United States District Court for the District of Columbia requiring company to pay $350,000 civil penalty and CEO to pay $50,000; see also S.E.C. v. Flowserve Corp. et al., No. 05 Civ. 612 (D.D.C. 2005)); In re Senetek PLC, Exchange Act Release No. 50400, 2004 WL 2076191 (Sept. 16, 2004) (cease-and-desist order); In re Schering-Plough Corp., Exchange Act Release No. 48461, 2003 WL 22082153 (Sept. 9, 2003) (final judgment in the United States District Court for the District of Columbia requiring company to pay $1 million civil penalty and CEO to pay $50,000; see also S.E.C. v. Schering-Plough Corp., No. 03 Civ. 1880 (D.D.C. 2003)); In re Raytheon Co., Exchange Act Release No. 46897, 2002 WL 31643026 (Nov. 25, 2002) (cease-and-desist order); S.E.C. v. Siebel Sys., Inc., Litig. Release No. 17860, 2002 WL 31643062 (Nov. 25, 2002) (consent judgment requiring company to pay $250,000); In re Secure Computing Corp. et al., Exchange Act Release No. 46895, 2002 WL 31643024 (Nov. 25, 2002) (cease-and-desist order); see also Report of Investigation Pursuant to Section 21(a) of the Securities Exchange Act of 1934: Netflix, Inc. and Reed Hastings, Exchange Act Release No. 69279, 2013 WL 5138514 (Apr. 2, 2013) (reporting investigation of Netflix, Inc.’s potential Reg FD violation, to guide issuers’ compliance with the law); Report of Investigation Pursuant to Section 21(a) of the Securities Exchange Act of 1934, Exchange Act Release No. 46898, 2002 WL 31650174 (Nov. 25, 2002) (“In re Motorola”) (same, for Motorola, Inc.). In only one reported action has an SEC action under Reg FD resulted in adversarial litigation. See S.E.C. v. Siebel Sys., Inc., 384 F. Supp. 2d 694, 709 (S.D.N.Y. 2005) (dismissing action against software company and two officers on grounds that, as pled, the corporate disclosures were neither material nor nonpublic). B. The Defendants AT&T: AT&T, a telecommunications company, is a Delaware corporation headquartered in Dallas, Texas. Dkt. 84 (Joint Stipulation of Facts, or “JSF”) 1. It is publicly traded on the New York Stock Exchange under the ticker “T.” Id. The products and services AT&T offered during the relevant period — 2015 and 2016 — included “wireless communications, data/broadband and Internet services, digital video services, wireline phone service, and telecommunications equipment.” Id. 2. At all relevant times, Randall L. Stephenson was AT&T’s chairman and chief executive officer (“CEO”), id. 8, and John Stephens was AT&T’s chief financial officer (“CFO”), and reported to Stephenson, id.
13-14. In this role, Stephens oversaw the company’s investor relations function. Id. 16. In 2015, John Stankey became CEO of AT&T’s Entertainment Group — one of four segments of AT&T’s business.2 Id.
