Qwest Settles Investor Class Action

Qwest Communications International Inc. (NYSE: Q) will pay $400 million to a group of investors who say they were misled by fraudulent revenue statements made by the carrier between 1999 and 2002. (See Shareholders Sue Qwest and Qwest Hit With Lawsuit.)

Qwest has signed a memorandum of understanding (MOU) under which it will pay the $400 million to the investors in three separate payments before September 2007. Qwest’s accountant, Arthur Anderson, also takes some of the responsibility. It will contribute $10 million to the settlement. (See Lawyers Gang Up on Carriers.)

Once the terms of the MOU have been satisfied, Qwest says, all charges will be dropped against it, but separate charges against Qwest’s CEO from 1997 to 2002, Joseph Nacchio, and former CFO Robert Woodruff will remain.

Qwest makes it clear in a statement today that it admits no wrongdoing. The carrier is also paying $250 million to the Securities and Exchange Commission to make an unrelated accounting probe go away.

Qwest CEO Richard Notebaert announced the settlement in the company’s third-quarter earnings call Tuesday. Qwest, the nation's 4th largest phone company, reported a loss of 8 cents per diluted share for the quarter, slimmer than the loss of 31 cents per share a year ago.

Qwest stock closed down one cent at $4.31 Tuesday.

— Mark Sullivan, Reporter, Light Reading

Be the first to post a comment regarding this story.
Sign In