DENVER — A judge approved a $25 million deal Tuesday that settles five shareholder lawsuits accusing Qwest Communications and former executives, including Joe Nacchio and billionaire Philip Anschutz, of insider trading.
The settlement will require Qwest to change corporate governance and appoint a committee of independent directors to consider separating the roles of chairman and chief executive.
The plaintiffs’ attorneys said an exhaustive review of more than 6 million documents, congressional testimony and other research did not turn up evidence of improper activity by former CEO Nacchio, Qwest founder Anschutz or other defendants.
“The review of millions of pages of documents failed to unearth a ‘smoking gun’ that connected Messrs. Nacchio or Anschutz to the accounting improprieties that were allegedly transacted by Qwest’s middle to upper management,” attorney Charles W. Lilley said in a brief made public Tuesday.
Representatives of Qwest and Anschutz were pleased with the settlement. Nacchio’s spokeswoman said he could not be reached for comment.
“On behalf of Anschutz company, first and foremost this is very good news for Qwest and it’s a major hurdle that’s removed,” Anschutz spokesman Jim Monaghan said.
Qwest spokesman Steve Hammack declined to comment on specifics. “We’re just pleased to put this matter behind us,” he said.
The lawsuits accused 16 former and current executives and directors, including Nacchio and Anschutz, of earning millions by misusing nonpublic information to profit from insider trading in the stock of Qwest and other companies.
The lead lawsuit was filed in November 2002 in Denver District Court by shareholder Thomas Strauss on behalf of the company.
It alleged the defendants breached their fiduciary duties.
A second was filed in another Colorado state court, two more in Delaware district courts and a fifth in U.S. District Court.
A class-action shareholder lawsuit still is pending in U.S. District Court.
The $25 million will come from an insurance fund negotiated among representatives of Qwest, various insurance companies and individuals who were covered by insurance, Lilley said.
Denver District Judge Lawrence Manzanares plans to subtract an estimated $7.5 million in attorneys’ fees from the total.
Nelson Phelps, executive director of the Association of US West Retirees, said his group agreed to the settlement after initial objections.
“We’re still very concerned about the financial misdoings during the Nacchio era,” he said.
Qwest acquired US West in 2000.
Nacchio quit in 2002. Anschutz resigned the same year as non-executive chairman but remains on the board.
Federal prosecutors have been investigating accounting irregularities at the telecommunications giant that serves 14 states.
The company ultimately removed $2.5 billion in revenue from its books amid the investigations.
The U.S. attorney’s office and the Securities and Exchange Commission are still investigating.
Two former Qwest middle managers have been acquitted of criminal wire and securities fraud charges, and a third plead-ed guilty to a single count of accessory after the fact.
A fourth is scheduled to face trial on wire and securities fraud counts next month.