Qwest’s Ex-CEO to Pay $400,000

Joseph Nacchio, former chief executive of Qwest Communications International Inc., will pay $400,000 to settle charges that he unjustly profited from hot initial public offerings, New York Atty. Gen. Eliot Spitzer said Thursday.

Nacchio, who neither admitted nor denied guilt, is the second executive to settle with Spitzer over the now-banned practice of “spinning,” which involves providing sought-after IPO shares to executives in exchange for investment banking business. The spinning involved Citigroup Inc.’s Salomon Smith Barney unit between 1996 and 2001, Spitzer said.

Philip Anschutz, the billionaire L.A. financier and founder of Denver-based Qwest in May agreed to pay $4.4 million to settle similar charges.

Nacchio agreed to contribute the $400,000 to New York Law School and St. John’s University School of Law. The schools would use the money to fund clinics to help ordinary investors bring securities arbitration claims, Spitzer said.

Nacchio’s lawyer, Scott Himes, said in a statement: “Mr. Nacchio is pleased to resolve the attorney general’s lawsuit and to put this matter behind him ....He is happy to resolve it in a way that benefits the citizens of New York.”

Spitzer said cases were pending against the other executives named in his September 2002 lawsuit: Bernard J. Ebbers, former chairman of WorldCom Inc.; former McLeodUSA Inc. CEO Clark McLeod; and Metromedia Fiber Network Inc. Chairman Stephen Garofalo.