Qwest Communications has agreed to pay $45 million, and former chief executive officer Joseph Nacchio, $1.5 million, to settle a lawsuit by the California State Teachers’ Retirement System (Calstrs).
The nation’s second-largest pension fund estimated that it lost $150 million, reported the Associated Press, following Qwest’s massive accounting fraud that came to light in 2002.
“We pursued this case not only to recover losses to the fund that directly affect the financial futures of our members, but to reinforce our commitment to good corporate governance for the benefit of all shareholders,” said Calstrs chief executive officer Jack Ehnes, in a statement. “Our members rely on us to act in their best interest as stewards of the fund, and we will continue to take action in the boardroom or in the courtroom to ensure that the companies in which we invest are held accountable for their conduct.”
Ehnes also maintained that by filing suit in California state court, Calstrs was able to recover approximately 30 times what it would have received if it had joined in a federal class action against Qwest.
The settlement also resolves Calstrs claims against Qwest’s bankers — Citigroup Global Markets, Lehman Brothers, J.P. Morgan Securities., Bank of America Securities, and Merrill Lynch — and against Qwest’s former auditor, Arthur Andersen.
The settlement was reached in December, noted the AP, but it had been under seal in San Francisco County Superior Court until the wire service filed a public-records request with the pension fund.
Nacchio, who faces 42 counts of insider trading stemming from $101 million in stock sales, faces a March 19 trial date. His attorney, Herbert J. Stern, told the AP that the settlement with Calstrs was not an admission of guilt by Nacchio.
Stern also stressed that insurance will pay for the settlement. “Mr. Nacchio paid nothingÂÂ not a penny,” he told the wire service. “My understanding is no Qwest executive paid anything.”