Capital Markets

Qwest Insider-trading Trial: CFO vs. CEO

Former chief executive Joseph Nacchio routinely downplayed concerns that the company's financial projections were too optimistic, Robin Szeliga tol...
Stephen TaubMarch 26, 2007

Former Qwest Communications chief financial officer Robin Szeliga began her testimony Monday in the trial of her onetime boss, former chief executive officer Joseph Nacchio, according to published accounts.

Nacchio has been charged with 42 counts of insider trading stemming from $101 million in stock sales. For her role in Qwest’s accounting scandal, Szeliga previously pleaded guilty to insider trading and agreed to cooperate with prosecutors. Last July she was sentenced to six months’ home detention and two years’ probation; she was also fined $250,000.

Szeliga told jurors Monday that her former boss routinely downplayed concerns from other Qwest executives that the company’s financial projections were too optimistic, according to the Denver Business Journal. As for whether business units had valid concerns, “he would make the determination,” she said, reported the Rocky Mountain News.

When Qwest’s former executive vice president of mass markets told Nacchio that she had “no idea” how she was going to close a $444 million gap between the company’s estimated revenue and its target revenue, Nacchio ordered her to “go back and find a way” to make it work, Szeliga reportedly told jurors.

According to the Journal, Szeliga also testified that Nacchio repeatedly stressed: “it was about growth. … We were a growth company. If our growth didn’t go as expected, our stock would reflect that.”

Szeliga also confirmed a statement made by defense attorney Herbert Stern during opening arguments, according to the Denver Post — that Qwest’s 2001 internal targets were higher because Nacchio wanted to push his employees to exceed expectations.

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