Legal News - Qwest to settle shareholder suit for an additional $40 million
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Qwest Communications [corporate website] will pay an additional $40 million to settle a class action shareholder lawsuit, according to an agreement released Monday in the company's second quarter earnings report. Of that number, $5 million comes from insurance revenue by former Qwest CEO Joseph Nacchio and former CFO Robert Woodruff. In 2006, a federal judge approved a $400 million settlement that did not include Nacchio or Woodruff, but the two former Qwest officials appealed, arguing that Qwest was required to indemnify them from future litigation. A federal court must still approve the new settlement terms.

Federal prosecutors indicted Nacchio in December 2005 on 42 counts of insider trading. He and other former Qwest executives still face civil fraud charges brought by the US Securities and Exchange Commission on allegations that Qwest improperly reported approximately $3 billion in revenue related to its 2000 merger with US West. Another former Qwest employee, ex-vice president Marc Weisberg, pleaded guilty to wire fraud in December 2005 and helped prosecutors build their case against Nacchio.

Last month, the US Court of Appeals for the Tenth Circuit granted prosecutors' petition for an en banc rehearing on whether Nacchio's insider trading conviction should be overturned. In March, a Tenth Circuit panel struck down Nacchio's previous conviction and ordered a new trial.

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