Nacchio could point to board's actions

The Denver Post, The (KRT)
Via Thomson Dialog NewsEdge
January 8, 2006

Former Qwest chief executive Joe Nacchio -- accused of criminal insider trading for selling $100.8 million worth of Qwest stock in 2001 -- may have a simple yet powerful defense for the sales: The board made him do it. Qwest publicly stated on several occasions between September 2000 and February 2001 that its board of directors had ordered Nacchio to unload millions' worth of company shares. Legal experts say the board's actions and company statements at the time could be vital to Nacchio's defense.

"He would argue that what he was doing was with full knowledge and authorization of the board," said Douglas McNabb, senior principal of McNabb Associates, a Washington, D.C.-based criminal defense law firm not involved in the Nacchio case. "That's huge." Federal prosecutors are expected to argue that even if Nacchio was told to unload Qwest stock, the 42 stock sales he made between January and May 2001 were illegal because he was aware of key information about the company's financial condition that wasn't publicly available.

They likely will also assert that Nacchio accelerated his stock sales instead of following the board's order to systematically divest his position. To obtain a conviction, prosecutors would have to convince a jury beyond a reasonable doubt that Nacchio dumped stock while he knew Qwest's financial condition was much weaker than he claimed publicly...