Judge OKs Qwest Pension Suit Settlements

May 29, 2009 (PLANSPONSOR.com) - A federal judge has given final approval to $695 million in settlements to shareholders suing Qwest Communications International Inc for securities fraud.

Judge Robert Blackburn’s order approving two settlement agreements was made public on Thursday in U.S. District Court in Denver, according to Reuters.   Shareholders, predominantly pension funds, filed numerous class action lawsuits beginning in 2001 when multibillion dollar accounting discrepancies began coming to light (see  CalSTRS Sues Qwest, Bankers Over $150 Million Loss ).

Colorado PERA and the  New York State Teachers’ Retirement System had bailed out of the process early on, ostensibly cutting their own deals, rather than waiting for the final resolution.

The investors had reached a proposed settlement with Qwest of $400 million in 2005. But that was held up by appeals by former Qwest CEO Joseph Nacchio and former CFO Robert Woodruff, according to the report.

Last August, Nacchio and Woodruff agreed to add an extra $5 million from insurance proceeds to the settlement, while Qwest pitched in another $40 million.   The U.S. Securities and Exchange Commission also contributed $250 million to the settlement, after Qwest paid the commission $250 million to settle a similar securities fraud lawsuit the SEC had filed earlier.

Nacchio, who was convicted in 2007 on 19 counts of insider trading, is serving a six-year prison term and was fined $19 million and ordered to forfeit $52 million in stock sales.