Anschutz to Pay $4.4 Million in IPO Case

From Reuters

Philip Anschutz, billionaire L.A. sports franchise owner and founder of Qwest Communications International Inc., as expected has agreed to pay $4.4 million to settle charges he unjustly profited from initial public offerings of stock.

The deal, first reported in late April, was officially announced on Tuesday by New York Atty. Gen. Eliot Spitzer.

In September, Spitzer charged Anschutz -- who was recently worth $4.9 billion, according to Forbes magazine -- with illegally profiting from the now-banned practice of “spinning” in 57 IPOs arranged by Citigroup Inc.'s investment banking arm.

The attorney general originally had sought to recover more than $1.4 billion from Anschutz, including profit from the sale of Qwest stock. He also charged four other top telecom executives with engaging in spinning, which is the receipt of hot IPO shares in exchange for investment banking business.


Spitzer said Anschutz, who neither admitted nor denied guilt, was the first executive to disgorge profit from spinning.

“The significance of this settlement goes well beyond the dollar amount,” said Christopher Bebel, a partner at Shepherd, Smith & Bebel in Houston and a former Securities and Exchange Commission prosecutor.

“It operates as a tacit recognition that the New York attorney general’s allegations over IPOs are sound,” Bebel said. “It will prompt others similarly situated to fork over settlement monies.”

Spitzer was one of the engineers of the recent $1.4-billion settlement with 10 brokerages over biased stock research.


Anschutz Co. said investor concerns over Wall Street practices made settling appropriate.

“A very negative environment has been created that tends to cast many individuals and investors as guilty first unless proven innocent -- but then makes it impossible to prove innocence so long as wrongdoing was at least theoretically possible,” the company said. “We have stated there was no wrongdoing here, and we believe that this settlement very clearly reflects that.”

Under the settlement, six New York law schools will divide $1.2 million to fund securities arbitration clinics, and $3.2 million will go to nonprofit groups.

Anschutz, of Denver, is best known in Los Angeles as owner of the Kings hockey team and part owner of the Lakers basketball team. He also is a major movie theater operator through Regal Entertainment Group.