Telecom Executive Agrees To Give Up Ipo Profits
New York Attorney General Spitzer today announced an agreement which resolves allegations that a leading telecommunications executive improperly received lucrative shares of Initial Public Offerings (IPOs).
Under the agreement, Joseph P. Nacchio, former Chief Executive Officer of Qwest Communications International, Inc., will disgorge $400,000 in profits from the controversial practice know as "IPO spinning."
"IPO spinning is no longer permitted under the accord negotiated with Wall Street investment firms," Spitzer said. "But we continue to pursue appropriate remedies against individuals who were enriched unjustly by the practices revealed in the course of our investigation."
Spitzer sued Nacchio, and four other telecom executives in September 2002, alleging that each had received millions of dollars in hot IPO offerings from the Salomon Smith Barney (SSB) division of Citigroup.
According to the complaint, SSB doled out lucrative IPO shares as an inducement and reward for investment banking business from Denver-based Qwest and other telecom companies. The complaint also alleged that Nacchio, and the other named officials, failed to disclose receipt of such shares from SSB.
Without admitting or denying liability, Nacchio has agreed to contribute $400,000 to two New York law schools. The clinics, to be established at New York Law School and St. John's School of Law, will help qualified small investors bring claims before securities arbitration panels.
Spitzer commended Nacchio for working with his office to resolve the matter. Earlier this year, Spitzer announced a settlement with Phillip F. Anschutz, the former Chairman of Qwest. The
case against the three other executives named in the original suit -- Bernard Ebbers of WorldCom, Stephen Garafolo of Metromedia and Clark McLeod of McLeodUSA -- is pending.
The agreement was negotiated by Assistant Attorney General Harriet Rosen and Assistant Deputy Attorney General Gary Connor.
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