The Association of U S West Retirees



Nacchio's defense calls case against him flawed
By Sara Burnett
Rocky Mountain News
Wednesday, November 21, 2007

In its final court filing before facing the 10th Circuit Court of Appeals next month, Joe Nacchio's defense team said Tuesday that the government's arguments for convicting the former Qwest CEO of insider trading were flawed and should be scrutinized "with care."

"The undisputed facts establish at least a reasonable doubt that Nacchio sold these shares because he had insider information he knew was material," attorney Maureen Mahoney argued in a 42-page filing.

She also said the court should acquit Nacchio or reverse the conviction and send the case back to U.S. District Court for a new trial before a different judge.

The court is scheduled to hear oral arguments Dec. 18.  There is no date set for a ruling, which could come at any time after the arguments.

At trial, and again in an appellate filing earlier this month, prosecutors said the former CEO knew when he sold stock between January 2001 and May 2001 that Qwest couldn't meet the aggressive revenue goals it was projecting to investors.  They also said Nacchio knew those "hard facts" about future revenue were critical, or material, to investors, but he kept quiet because disclosing them would have sent the stock price south -- as occurred after the company later shared the information.

Nacchio's attorneys argue that the CEO did nothing wrong.  He announced publicly that he planned to sell his shares, then sold fewer shares than originally planned because he was confident the stock price would go up -- not down, Mahoney stated in Tuesday's filing.  Qwest's audit committee and outside auditors determined the information Nacchio had was not material to investors, and the company's general counsel had the option to stop Nacchio from selling but did not, she added.