Legal News

Hope Still Alive For Joe Nacchio

By Dionne Searcey

For now, Joe Nacchio keeps on paddling.

Over the past several months, we’d worked a waterfall metaphor into our coverage of the appeals of Joe Nacchio, the former Qwest CEO who was convicted in 2007 on insider-trading charges. Nacchio was being pulled downstream — toward the waterfall — but he kept paddling, paddling, paddling, trying to avoid having to serve his six-year sentence.

Nacchio's attorneys and the government had been expecting a decision on whether the court would grant cert chiefly on the issues of whether federal judge Edward Nottingham (who is no longer on the bench) inappropriately excluded an expert witness as well as whether the government based its insider trading charges not on material, inside information but on future revenue projections.

But missing today from the Supreme Court's orders was any mention of Nacchio’s case. In a rare move, the court last week requested the entire appellate court file.

Should the court take up the case on the latter of the two issues, the outcome could have far-ranging implications for the exposure executives have to insider trading charges when they discuss financial outlooks with other employees inside their corporations before making public announcements. The U.S. Chamber of Commerce has filed an amicus brief on this matter.

Latham’s Maureen Mahoney, Nacchio's appellate attorney, argued in a petition to the Supreme Court that during the time of Nacchio's stock sales, which were part of a planned stock-selling program, Qwest met the revenue projections it had shared publicly with investors.

“If the internal debates and predictions underlying this prosecution count as ‘material inside information’ then no company or executive can buy or sell stock, ever, without risking capricious criminal prosecution,” Mahoney wrote in her brief.

People in Nacchio's camp see the court's move as a positive sign for Nacchio, who has been through a roller coaster of decisions in the case as one appellate panel tossed out his conviction only to be reinstated by another court panel. Said Mahoney, in a statement: “This request and its delayed action is a sign that the petition is being given serious consideration.”

The court will likely mull the court file over its break. Look for a decision in late September.

Full post as published by Law Blog - WSJ.com on June 29, 2009 (boomark / email).