DENVER – Former Qwest Communications International CEO Joseph Nacchio’s conviction yesterday on insider-trading charges hinged on a misleading conference call, according to Bloomberg News.
Nacchio was found guilty of 19 federal counts for selling $52 million in Qwest shares between April 26 and May 29, 2001, based on private reports that the company would miss its revenue targets. Prosecutors said he should have disclosed that recurring revenue from Qwest’s fiber-optic network was falling short of targets even as the market for one-time sales of network capacity was shrinking. The company’s market value later plunged by $100 billion.
In a call on April 24, 2001, he failed to tell investors the company had been able to hit its targets only because of those one-time sales, a juror told Bloomberg. “He was being asked in that investor call, ‘how are you hitting your numbers?’ and he did not tell them how he was hitting the numbers,” said Terrell Joseph Dye, a radiographer from Littleton, Colo. “It all hinged on the one-time sales. We felt he had enough information [that wasn’t public], and he shouldn’t be trading.”
Nacchio, 57, is to be sentenced on July 27. He faces penalties of as much as 10 years in prison and $1 million in fines on each criminal count.
