Ex-Qwest CEO Settling Spinning Probe - TheStreet

Ex-Qwest CEO Settling Spinning Probe

Former exec Joe Nacchio will donate $400,000 to two New York-area law schools.
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Former

Qwest

(Q)

Chief Joe Nacchio agreed Thursday to settle allegations by New York's attorney general that he unfairly profited from IPO handouts.

Nacchio is expected to turn over $400,000 in alleged profits from the so-called IPO

spinning scheme, contributing the money to two New York-area law schools.

Nacchio becomes the second key Qwest figure to settle the spinning allegations brought by Eliot Spitzer. In May, Nacchio's former boss, Qwest Founder Phil Anschutz,

settled with Spitzer's office by agreeing to make a $4.4 million donation to charity.

Charles Stillman, Nacchio's attorney, was unavailable for comment Thursday. When

TheStreet.com

reported this summer that

Nacchio was negotiating with Spitzer's office, Stillman denied there were any discussions involving his client.

Qwest is the subject of several criminal and civil investigations into its accounting and business practices during Nacchio's regime. As the Denver local phone giant veered toward the brink of insolvency, both Nacchio and Anschutz were busy unloading the stock. Between early 1999 and February 2002, Nacchio sold $213 million in stock and Anschutz dumped $1.7 billion worth.

Nacchio and Anschutz are two of five telecom executives accused of receiving millions of dollars' worth of lucrative IPO shares in exchange for banking business during the heady late-1990s telecom boom. Spinning refers to the underwriting practice of distributing shares in red-hot initial public offerings to select executives as a favor. In this case the underwriter was the Salomon Smith Barney investment banking division of

Citigroup

(C) - Get Report

, whose telecom coverage was spearheaded by analyst Jack Grubman.

Spitzer's office says the spinning case is still pending against former

WorldCom

Chief Bernie Ebbers, former

Metromedia

exec Steve Garafolo and

McLeodUSA

Founder Clark McLeod.

Nacchio is expected to make his donations to the New York Law School and St. John's School of Law.