The Vig

The Denver Post published an article Thursday which details the classified information former Qwest CEO Joe Nacchio said was critical to his defense against allegations of insider trading.  The details are making a splash at both The Huffington Post and TPM.  I didn’t originally buy his “classified” defense and am having a little trouble swallowing it now.

Even if you believe his story, it still doesn’t explain why he was optimistic about Qwest’s future while at the same time dumping stock. According to the timeline put forth in the documents, the critical meeting occurred in February 2001 and at that time Nacchio balked at the government’s request. What exactly made him believe the government would reward his refusal to play ball by giving him a nine-figure contract to build a network which he himself suspected might be illegal? I don’t get that one at all.  Prosecutors also have a few questions.

If the secret contract story is to be believed, Joe had to know he wasn’t going to get the contract in February 2001 and began selling his stock beginning in the second quarter of that year. Whether the thing existed or not, the ride was coming to an end and he knew it. He should have told his investors. That he didn’t makes him a felon.