Blogging the Nacchio Trial

Editor’s Note: This post is by J. Robert Brown, Jr. of the University of Denver Sturm College of Law.

The trial of former Qwest CEO Joe Nacchio begins next Monday, March 19, in the federal district courthouse in downtown Denver.  It is the last significant criminal case arising out of the corporate scandals that led to the adoption of Sarbanes-Oxley.  The SEC case against Nacchio is pending.  Qwest has already settled with the Commission in an agreement that included a $250 million civil penalty. 

The 42-count criminal indictment (a mere six pages long) does not revolve around financial fraud but insider trading.  It alleges that Nacchio sold shares worth more than $100 million while aware of material non-public information, with the indictment alleging that he was “specifically and repeatedly warned about the material, non-public financial risks facing Qwest and about Qwest’s ability to achieve its aggressive publicly stated financial targets.” will provide daily coverage of the trial.  The blog is a collaboration of students and faculty on corporate governance issues.  Faculty and students will rotate through the eight-week trial with the expectation that there will be at least two posts each day the trial is in session (the trial will not be conducted on Fridays).  Primary materials on the case can be found at the University of Denver Corporate Governance web site. 

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One Comment

  1. Arthur Mboue
    Posted Saturday, March 17, 2007 at 3:05 pm | Permalink

    Under SOX of 2002, the fraud guideline has been boosted, guideline reductions like ‘super acceptance’ of guilt, plea bargain, coorperation with the prosecution, that were available to White Collar defendants are being cut back. Federal prosecutors now have limited discretion, to charge and accept guilty plea agreements to only serious and provable offenses. The dilemna is that sometimes it is difficult to assess the risk of convictions (also indictments)in the early stages of the government investigation and trial. But, the implementation of these SOX policies may create a new defense strategy for CEOs including QWest CEO Nacchio, which will shift liabilities from CEO suite to a low level manager office.
    In sum, we must remember that recent ‘earthquake’ fraud indictments, convictions and sentencings of super power, Kenneth Lay and Skilling, should serve to warn corporate America incluiding CEO Nacchio and others that the old abuses of excuses will not fly anymore. Judges, juries, prosecutors, regulators, media, Wall Street, shareholders, creditors and customers are holding CEOs to higher standards. Ignoring early financial and managerial warnings, aceepting suspect or overly up beat ‘prophet’ advises and shuting eyes to questionable practices in the company as long as profits keep rolling in and big paychecks keep checking in the CEOs mailboxes are no longer acceptable forms of management style and risk management.
    Arthur Mboue, MBA, JD, Adjunct faculty research fellow (affiliate)