A former top telecommunications executive will pay $400,000 to clinics that help investors recoup losses to settle allegations he improperly got more than $1 million in a lucrative initial public offering.
Joseph Nacchio, Qwest Communications International Inc.’s former chief executive, will pay the settlement involving “IPO spinning” that is now prohibited under a Wall Street enforcement settlement involving New York Attorney General Eliot Spitzer.
Last year, a dozen of Wall Street’s largest brokerages agreed to a $1.4 billion global settlement of conflicts of interests.
“We continue to pursue appropriate remedies against individuals who were enriched unjustly by the practices revealed in the course of our investigation,” Spitzer said Thursday.
Under the agreement, the former Qwest executive doesn’t admit or deny the charge against him. He will pay the settlement to clinics that assist investors in bringing claims to securities arbitration panels at New York Law School and St. John’s School of Law.
“Mr. Nacchio is pleased to resolve the attorney general’s lawsuit and to put this matter behind him,” Nacchio’s attorney, Scott Himes, said in a statement. “He settled the case without any finding of wrongdoing and he’s happy to resolve it in a way that benefits the citizens of New York.”
Himes wouldn’t answer questions about the case.
Qwest spokesman Steve Hammack said, “We really wouldn’t have any comment on the matter.” He said it was “a private matter” between Nacchio and the attorney general.
A year ago, when he announced the civil suit, Spitzer said Nacchio took in more than $1 million from IPO spinning.
Spitzer had accused Nacchio, Qwest founder and former chairman Philip Anschutz and three other executives, of receiving millions of dollars in hot IPO offerings from the Citigroup’s Smith Barney division.
Smith Barney provided the IPO shares as “an inducement or reward” for landing those firms as investment banking clients, Spitzer said. Spitzer also accused the executives of failing to disclose that they received the IPO shares.
The executives reaped millions of dollars in profits when the shares were later publicly traded, Spitzer said. Individual investors are hurt by spinning because it was part of the inducements that led to inflated ratings of stocks in Wall Street’s 1990s bubble.
In May, Anschutz agreed to pay $4.4 million for accepting the IPO shares in exchange for his firm’s investment banking business.
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