En Banc Appeals Court Reinstates Conviction of Ex-Qwest CEO
Posted Feb 25, 2009 1:20 PM CDT
By Debra Cassens Weiss
An en banc federal appeals court has reinstated the insider-trading conviction of Joseph Nacchio, the former chief executive of Qwest Communications.
In a 5-4 ruling, the full 10th U.S. Circuit Court of Appeals based in Denver said the trial judge did not err by excluding the testimony of a defense expert on corporate finance, the Denver Post reports.
"The district court's exclusion of the testimony was not arbitrary, capricious, whimsical, or manifestly unreasonable; nor are we convinced that the district court made a clear error of judgment or exceeded the bounds of permissible choice in the circumstances," the court said in its majority opinion.
A three-judge panel of the same appeals court had earlier overturned Nacchio's conviction and ordered that a new judge hear his case on retrial.
Nacchio was convicted and sentenced to six years in prison in July 2007 for selling $52 million in Qwest stock when he knew the company was facing financial troubles. At the same time, prosecutors alleged, he reassured investors that the company was doing fine.
The excluded expert, Northwestern University's Daniel Fischel, was expected to testify that Nacchio's pattern of stock sales didn't appear to rely on insider information. Nacchio has said he sold shares of the financially troubled telephone service provider because they were set to expire.