California Teachers’ Pension Plan Sues QwestDec 12, 2002 | AP The California State Teachers’ Retirement System sued Qwest Communications and several financial services companies Wednesday, saying the companies used fraudulent practices and cost the pension plan $150 million.
CalSTRS, which holds about $94 billion in its investment portfolio, said in its complaint that it had invested in Qwest securities based on statements by the banking and financial firms that were false, incomplete and “materially misleading.”
The suit also named Qwest’s founder Philip F. Anschutz and former CEO Joseph Nacchio, alleging they falsely represented the company’s financial situation. Additionally, CalSTRS alleges that Anschutz took more than $1.9 billion from the company in insider trading, and that Nacchio took $228 million.
Denver-based Qwest disclosed in July that it had improperly accounted for transactions worth $1.6 billion. In October, the company restated $531 million in revenue that was prematurely recorded.
The complaint, filed in San Francisco Superior Court, also named Salomon Smith Barney Inc., Citigroup Inc., Lehman Brothers Inc., Bank of America Corp., JP Morgan Chase & Co., and Merrill Lynch & Co.
CalSTRS’s suit charges that the financial firms sold Qwest securities, while at the same time “creating and financing many of the transactions” that gave the impression Qwest was a successful company.
A Qwest spokesman said it was the company’s policy to decline comment on pending lawsuits.