Trust Updates Archive
(Feb. 1, 2007--Chicago, IL)--Qwest and its former chief executive officer Joseph Nacchio have agreed to pay the California State Teachers' Retirement System (CalSTRS) a total of $46.5 million to settle pension losses, according to the parties. The settlement was reached on December 29, 2006, but not made public until yesterday.
CalSTRS opted out of a federal class action lawsuit that sought to recover $1.6 billion in investors losses. The class action alleged that financial misrepresentations by Qwest inflated the firm's stock price. In 2004, Qwest paid the U.S. Securities and Exchange Commission $250 million to settle fraud allegations. In 2005, the firm reached a $400 million settlement in the federal class action. CalSTRS meanwhile pursued an individual lawsuit against Qwest.
"By filing suit in California state courts," says Jack Ehnes, CalSTRS chief executive officer, "CalSTRS was able to recover approximately 30 times what it would have received had it participated in the federal class action."
The Qwest settlement includes $45 million from Qwest, its accountants (Arthur Andersen LLP), and its bankers: Citigroup Global Markets, Lehman Brothers, Merrill Lynch, Bank of America Securities, and J.P. Morgan Securities. An additional $1.5 million is to be paid by Nacchio, according to the settlement agreement. Settlement proceeds, according to Nacchio's legal counsel, were paid by insurers.
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