Government backs Notebaert in Tellabs case
By Jeff Smith
Rocky Mountain News
Tuesday, February 13, 2007
The full force of the U.S.
government is siding with Qwest Chief Executive Dick
Notebaert in a case stemming from statements he made while
CEO of telecommunications equipment maker Tellabs Inc. A
federal appellate panel, overturning a lower court decision,
ruled a year ago that certain portions of a shareholder
lawsuit alleging that Tellabs and Notebaert deceived
investors in 2001 could proceed.
The judge found that while some of Notebaert's statements
about Tellabs' financial condition were acceptable corporate
"puffery," others were more troublesome.
Tellabs, which has repeatedly said the case is without
merit, appealed to the U.S. Supreme Court.
In a 30-page brief this month to the Supreme Court,
attorneys from the Justice Department and Securities and
Exchange Commission wrote in support of Notebaert, saying
the appellate judge failed to "give force" to Congress'
insistence of a higher threshold of proof for such
While private securities fraud action "are an essential
supplement" to government lawsuits and charges, "Congress
has recognized a potential for such actions to be abused in
ways that impose substantial costs on companies that have
fully complied with the applicable laws," the attorneys
Notebaert reportedly didn't sell any Tellabs stock during
the period in question.