Legal News

SEC Strikes Out on Qwest Claims

By Dionne Searcey

It's been more than a decade since Joseph Nacchio allegedly engaged in trades that landed him in prison, and yet the Nacchio news tied to that era keeps giving and giving.

The latest: the SEC's case against two former Qwest employees went belly up yesterday.

According to this story from the AP, federal judge Marcia Krieger ruled in favor of former Qwest Communications International President Afshin Mohebbi and former accountant James Kozlowski.

Additionally, she dismissed some claims against former accountant Frank Noyes but allowed others to continue.

Marcia Krieger said the fraud claims against Chief Financial Officer Robert Woodruff could proceed to trial. Here’s the Denver Post story on the matter.

The four Qwesters  had asked the judge to rule on allegations by the SEC of whether they misled investors by not specifying how much of the company’s revenue between 1999 and 2002 was one-time and how much was recurring, the AP said.

The ruling shows the evidence didn’t support the claims against Mohebbi, his attorney, Paul Grand, told the AP.

“The simple fact is that Afshin Mohebbi was an exemplary executive who never should have been sued,” Grand said in a statement.

In a statement, Kozlowski's attorney Kevin D. Evans noted there were 69 depositions and 13 million pages of documents the SEC reviewed. He said, "The fact is Mr. Kozlowski did not run in those same circles" as Nacchio and Woodruff. He called the suit a "tremendous waste of taxpayer money."

The AP says a pretrial conference in the case against Woodruff and Noyes is set for June 7. The court in January approved a settlement between the SEC and Nacchio that bars him from being an officer of a public company again.

Nacchio was imprisoned after being convicted of insider trading in 2007. He recently sued his attorneys who represented him on those charges, saying they spent too much money on underwear and hotel movies among other things during the six-week trial. Nacchio was billed $25 million for their services, the suit says.

Full post as published by Law Blog - WSJ.com on April 01, 2011 (boomark / email).