A federal judge has thrown out some claims in a civil lawsuit the Securities and Exchange Commission filed against former Qwest executives, including former CEO Joe Nacchio.
U.S. District Judge Marcia Krieger let stand allegations focusing on whether Denver-based Qwest Communications International Inc. misled investors by not specifying how much of its revenue between 1999 and 2002 was one-time and how much was recurring.
A hearing is set April 14 for the SEC to clarify remaining claims, including insider trading allegations against Nacchio and former Chief Financial Officer Robert Woodruff that hinge on those claims, Krieger wrote.
Some claims tossed Wednesday concerned whether defendants improperly helped Qwest backdate sales or record revenue from leases of its fiber-optic network upfront rather than over the life of the contracts. The SEC alleged that both practices could have given investors a misleading picture of Qwest’s revenues.
Krieger dismissed some of those claims, saying the SEC hadn’t shown that certain defendants were to blame for any alleged deceit.
The SEC lawsuit was filed against Nacchio, Woodruff, former President Afshin Mohebbi, and former accountants Frank Noyes and James Kozlowski.
Nacchio was convicted on 19 criminal insider trading counts but was acquitted on 23 counts in 2007. He reported to prison last year but is awaiting a new sentence following an appeals court ruling that his sentence of six years in prison and $71 million in fines and forfeitures was improperly calculated.
The SEC allegations concerning insider trading are different from the criminal case, Krieger wrote. The criminal case alleged Nacchio sold Qwest stock using insider information that the company wouldn’t meet its public revenue forecasts. The SEC focuses on whether he recognized that one-time revenues and monthly revenues were being reported together.
– Associated Press