CalSTRS Announces $46.5 Million in a Settlement Against Qwest Communications and Former CEO
Sacramento, CA – The California State Teachers’ Retirement System has reached a settlement of $46.5 million with Qwest Communications.The lawsuit accused the telecommunications firm of misrepresenting its financial well-being by artificially inflating its stock price in 2001, leading to financial restatement and shareholder losses in excess of $1.6 billion.As part of the settlement, former Qwest CEO Joseph Nacchio will pay $1.5 million to settle CalSTRS claims against him.
“We pursued this case not only to recover losses to the fund that directly affect the financial futures of our members, but to reinforce our commitment to good corporate governance for the benefit of all shareholders,” said Jack Ehnes, CalSTRS chief executive officer. “Our members rely on us to act in their best interest as stewards of the fund, and we will continue to take action in the boardroom or in the courtroom to ensure that the companies in which we invest are held accountable for their conduct.”
The Qwest settlement included $45 million from Qwest, its accountants and banks, and $1.5 million from former Qwest CEO Joseph Nacchio. Represented by Cotchett, Pitre, Simon & McCarthy of Burlingame, California, CalSTRS opted out of federal class action lawsuits against both companies to pursue and to maintain control over its own cases in California state courts.
“By filing suit in California state courts, it is estimated that CalSTRS was able to recover approximately 30 times what it would have received had it participated in the federal class action as a class member,” Ehnes continued.
The Qwest case included the settlement of claims against Citigroup Global Markets, Lehman Brothers, J.P. Morgan Securities Inc., Bank of America Securities LLC, Merrill Lynch & Co., and Arthur Anderson LLP.
CPS&M was the lead counsel joined with Girard Gibbs LLP of San Francisco to prosecute the Qwest case.
With a $157.8 billion investment portfolio, the California State Teachers’ Retirement System is the second-largest public pension fund in the United States. It provides retirement, disability and survivor benefits to California’s nearly 800,000 public school educators from kindergarten through community college.