The U.S. Supreme Court on Monday may let former Qwest CEO Joe Nacchio know whether it will hear his case.
Nacchio has been residing in the Schuylkill Federal Correctional Institution in Minersville, Pa., since mid-April for convictions on 19 counts of insider trading in 2007.
Nacchio’s case has been quite a volley. He won a reversal on appeal. But then in a rare “en banc” hearing, the appeals court reversed its reversal and demanded he start serving his six-year prison sentence.
His remaining hope is the Supreme Court where he’s made a slew of arguments.
His best arguments center around the term “materiality.” 1. The trial court improperly defined the term “materiality” for the jury, and 2. the court excluded the only expert witness Nacchio hired to help the jury understand the term.
The case hinged on the prosecution’s argument that Nacchio pulled the old pump and dump, hyping Qwest’s prospects while he unloaded his stock. They argued that the “material” information he held as he sold his stock was that the projections he gave the public could not possibly come true.
Nacchio argues that just about any CEO who sells stock while making a prediction that does not come true could be prosecuted under this precedent. Usually, insider trading cases are built upon more concrete material information, such as a merger being called off or a key regulatory approval not coming through, not shoddy forecasts.
We’ll see what the Supremes have to say about “materiality,” if anything.
Meantime, if the court does not reveal on Monday whether it will hear his case, Nacchio will likely have to wait until September for the answer. And it’s a long wait in the pokey.