DENVER -- Prosecutors would be allowed to reopen their case in the $101 million insider trading trial of former Qwest chief executive Joe Nacchio to question a financial analyst about a document that they say was illegally backdated, the judge in the case ruled yesterday.
The trial entered its fourth week with no word on whether Nacchio, who resigned from Qwest Communications International Inc. under pressure in 2002, will take the stand.
Prosecutors say Nacchio completed the stock sales between January and May of 2001 after learning that Qwest was at financial risk and could miss revenue targets.
They allege a document that committed Nacchio to selling the stock was backdated after Nacchio learned about Qwest's worsening financial condition. At issue are two stock sales Nacchio completed on Jan. 2 and Jan. 3, 2001, in which he sold 350,000 shares valued at more than $14 million.
Prosecutors say the document dated Nov. 3 was actually created on Dec. 13.
Defense attorneys deny backdating allegations and say Nacchio was optimistic about Qwest's future, but was required under the terms of his contract to exercise the stock options.
U S District Judge Edward Nottingham told prosecutors yesterday they could reopen their case and recall David Weinstein, a financial analyst who handled Nacchio's investments, to testify about the document.
Weinstein previously testified that he and Nacchio discussed investment strategies in late 2000 for a large number of shares Nacchio was due to receive in early 2001. He said Nacchio did not mention signing the sale commitment document during a Nov. 2, 2000, phone call but did tell Weinstein on Dec. 9 that he was signing the document.
Nacchio, 57, is accused of illegally selling stock based on nonpublic information .
Each of the 42 insider trading counts against him carries a penalty of up to 10 years in prison and a $1 million fine.