AUSWR
The Association of U S West Retirees
 

 

 

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 "state-of-mind cases."

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 wrote.

Notebaert reportedly didn't sell any Tellabs stock during the period in question.

http://www.rockymountainnews.com/drmn/other_business/article/0,2777,DRMN_23916_5347671,00.html