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Today's top stories: iPhones, Goldman Sachs probe, Tourre and derivatives rules

The story: AT&T says loss of iPhone exclusivity won't have "material" negative impact on earnings.

The takeaway: When it comes to financial disclosures, materiality rules. Which is why, with so much speculation that AT&T will lose its exclusive right to distribute the iPhone, AT&T is giving investors a clue into its thinking. But TechCrunch doesn't believe the firm. Writes Evelyn Rusli: "There is that 20% chunk of individual users, who are highly mobile. If Verizon or T-Mobile, or whoever the next iPhone carrier is, attracts a large number of defectors from this slice, guess what AT&T, you have a material impact on earnings."

The story: Lawyers for Goldman Sachs' Fabrice Tourre, facing civil fraud charges, will receive 9 million pages of investigative documents from the SEC and wants to interview 50 people for trial.

The takeaway: Barring a settlement, which doesn't seem within reach, this is going to be a long one. Tourre is fighting to clear his name (Goldman is covering his bills) and doesn't want to face the kind of sanction that would kick him out of the securities industry. Goldman settled for $550 million because it has a public stock and knew the damage from a protracted trial would be many times that if it went to court. But Tourre has his future to salvage--and the trial will be a test as to whether the SEC's case was as strong as it said.

The story: Goldman Sachs is being investigated in the U.S. and abroad for failing to disclose the potential of an SEC suit against it.

The takeaway: Don't expect much more than a slap on the wrist for this one if regulators decide to bring action against Goldman. The SEC has been very clear that firms do not necessarily have to alert investors they might face an enforcement action if the action is unlikely to have a material impact on the company. And it'll be hard to show that Goldman, which was surprised by the SEC suit, knew the suit come with a $550 million price and billions more in losses in market capitalization.

By Zachary Goldfarb  |  August 10, 2010; 12:32 PM ET
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Next: Is the SEC enforcement division about to lose subpoena power?


RE AT&T sayingit won't be negatively effected by loss of iPhone exclusivity: Uh, yeah right. I'm not an at&t user, and have not switched because of their 3G service coverage for the iPhone. I know many at&t iPhone users who only have at&t because of the iPhone. If it wasn't for the iPhone, they'd be with another provider because other providers have better 3G coverage.

Now the issue probably won't be how many iPhone users will drop at&t and go to Verizon (for example), but how many users who were about to switch, or thinking of switching, now won't move to at&t and at&t won't get their business. Also, there may be some at&t users who may actually consider dropping at&t and moving to verizon because the coverage is better. Yes, the problem with this is buying another iPhone, since you can't take a GSM at&t iPhone and use it on the CDMA Verizon network, but the question is - for some users, would the cost be worth it? Also, they could potentially sell their iPhone online to make some of their money back.

In the end, at&t will take a financial hit with the loss of exclusivity. Maybe not from existing customers, but from future ones.

Posted by: Anonymous | August 11, 2010 8:02 AM | Report abuse

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