AUSWR
The Association of U S West Retirees
 

 

 

Qwest investors still wait for settlement cut
By Jeff Smith
Rocky Mountain News
Thursday, July 19, 2007


The wheels of justice for Qwest shareholders have been turning slowly.  While their attorneys have been paid tens of millions of dollars, Qwest stockholders from the Joe Nacchio era still are waiting for their cut of a $400 million class-action civil settlement agreed to in late 2005 and approved by a federal judge last fall.

And they will have to wait at least several more months because a legal challenge by former Qwest CEO Nacchio and former Chief Financial Officer Robert Woodruff won't be heard until this fall.

The good news is that proceeds from Qwest's $250 million settlement in the fall of 2004 with the Securities and Exchange Commission will be distributed soon, along with more than $3 million from SEC settlements with former Qwest executives.

The slow pace of investor restitution is frustrating to many, especially when Nacchio is responsible for holding up part of the payments.  The funds will return only a fraction of the billions of dollars investors collectively lost during the 1999-2002 period.

"I think it's really unfortunate that one individual who already has been convicted and is going to be sentenced can, in effect, hold up payment to shareowners who have been waiting for at least some retribution," said Nelson Phelps, executive director of the Association of U S West Retirees.

Nacchio is scheduled to be sentenced July 27 on 19 charges of insider trading.  Prosecutors are seeking a seven-year prison sentence.

Also frustrating for Qwest shareholders is that the lead law firm in the class-action case, Lerach Coughlin Stoia Geller Rudman & Robbins, has been paid its $60 million in fees, according to Curtis Kennedy, attorney for the retirees' group.

Kennedy, who was instrumental in getting Lerach's fee slashed from $96 million, said Lerach put a provision in the settlement agreement to get paid right away.  A Lerach attorney didn't return a phone call for comment.

Nacchio and Woodruff are challenging the settlement because they have been excluded from it, meaning Lerach plans to pursue them and their money separately.

U.S. District Judge Robert Blackburn denied their challenge, but Nacchio and Woodruff appealed to the 10th Circuit Court of Appeals.  Their case is scheduled to be heard in the October session, according to the appellate court docket.

The SEC joined the class-action fund so the money could be more efficiently distributed at one time.  But the SEC isn't going to wait for the class-action case to be resolved, said Mary Brady, SEC assistant regional director in Denver.

"We are moving forward with our distribution, still aiming for a midyear 2007 distribution," Brady said.  "It's fairly imminent."

She said Gilardi & Co., the distribution agent, is working out the final details of the distribution.  Some investors have opted out of the settlements and are pursuing their own legal action.

The other bit of good news for Qwest shareholders waiting for payback:  At least the money has been earning interest.

smithje@RockyMountainNews.com or 303-954-5155

http://www.rockymountainnews.com/drmn/tech/article/0,2777,DRMN_23910_5635182,00.html