DENVER—Lawyers for former Qwest CEO Joseph Nacchio filed a brief Tuesday rebutting federal prosecutors who oppose a Supreme Court review of Nacchio’s insider trading conviction, saying he never should have been prosecuted in the first place.
In response to a brief the government filed last month, Nacchio’s lawyers wrote that the alleged insider information cited by prosecutors referred to immaterial internal predictions that didn’t have to be publicly disclosed.
Nacchio’s lawyers argue that “if the internal debates and predictions underlying this prosecution count as ‘material inside information’ then no company or executive can buy or sell stock, ever, without risking capricious criminal prosecution.”
They also repeated arguments that Nacchio’s trial judge improperly barred testimony from a financial expert that could have led to an acquittal.
Nacchio’s lawyers said the government was choosing expediency over due process and “is willing to drive corporate America and basic fairness off a cliff to preserve its conviction in a case that should never have been brought.”
The government argued in a brief filed last month that the trial evidence went beyond the internal predictions. Prosecutors also argued that jurors’ conclusion on what information was material was reasonable.
Nacchio was convicted in 2007 on 19 counts of insider trading based on allegations that he sold $52 million worth of stock in 2001 based on nonpublic information that Denver-based Qwest Communications International Inc. might miss its sales targets. He was acquitted of 23 counts of the same charge.
A three-judge panel of the 10th U.S. Circuit Court of Appeals granted Nacchio a new trial last year in a 2-1 ruling on grounds that the trial judge improperly barred the testimony from a financial expert. The full appeals court issued a 5-4 ruling in February reinstating the conviction, saying the trial judge was within his discretion.
Nacchio’s attorneys and prosecutors disagree on whether the 10th Circuit ruling conflicts with rulings of other federal appeals courts.
