In the Courts

In United States v. Nacchio, No. 07-1311, 2009 WL 2343716 (10th Cir. July 31, 2009), the U.S. Court of Appeals for the Tenth Circuit held that a district court's sentencing order relied on an improper calculation of the defendant's “gain resulting from the offense” of insider trading because it was not limited to the gain specifically attributable to his criminal conduct. The Tenth Circuit also held that the district court erred in requiring the defendant to forfeit the gross amount of his criminal stock transactions rather than his net profit from those transactions.

Nacchio is the latest in a series of important district court and appellate opinions regarding the prosecution and conviction of Joseph Nacchio, former CEO of Qwest Communications International, Inc., for insider trading in the shares of his former company. In December 2003, the government obtained an indictment that charged Mr. Nacchio with 42 counts of insider trading for allegedly exercising Qwest stock options on the basis of material, nonpublic information. A jury convicted Nacchio on 19 of those counts and acquitted him of the other 23. The district court sentenced Nacchio to 72 months' imprisonment and two years of supervised release (to run concurrently with his term of imprisonment), and it ordered him to pay a $19 million fine and to forfeit approximately $52 million.