Telecom Executive Agrees To Give Up Ipo Profits

Attorney General Spitzer today announced an agreement that resolves allegations that a leading telecommunications executive improperly received lucrative Initial Public Offering (IPO) shares.

Under the agreement, Phillip F. Anschutz, the former chairman of Qwest Communications International, Inc., will disgorge $4.4 million in profits on the IPO shares. This marks the first time an executive has given up profits linked to the controversial Wall Street practice known as "IPO spinning."

"Even though IPO spinning has been banned under the recent Wall Street accord, we continue to pursue appropriate remedies against individuals who were enriched unjustly by the practices revealed in the course of our investigation," Spitzer said.

Spitzer sued Anschutz in September 2002, alleging that he and the officers of four other telecom firms improperly received millions of dollars in hot IPO offerings from the Salomon Smith Barney (SSB) division of Citigroup.

According to the complaint, SSB doled out lucrative IPO shares as an inducement or reward for investment banking business from Qwest and other companies. The complaint also alleged Anschutz and the named officers failed to disclose that they had received such shares from SSB.

The lawsuit further charged that profits from the sale of the IPO shares unjustly enriched Anschutz and that his failure to disclose the receipt of those shares violated the Martin Act, New York's securities law.

Without admitting or denying liability, Anschutz has agreed to contribute an amount to charity that is roughly equal to his IPO profits.

Under the terms of the settlement, six law schools in New York will divide $1.2 million to fund securities arbitration clinics. The clinics will help qualified New York State investors bring claims before securities arbitration panels.

The six law schools eligible to receive the monies are:

Albany Law School
Brooklyn Law School
Fordham University School of Law
Pace University School of Law
Syracuse University College of Law
SUNY at Buffalo Law School

In addition, $3.2 million will be divided among not-for-profit groups for the benefit of all New Yorkers.

Spitzer commended Anschutz for working with his office to resolve the matter. The action against the four other executives named in the original suit is continuing.

The agreement was negotiated by Assistant Attorneys General Harriet Rosen and Gary Connor under the supervision of Investment Protection Bureau Chief Eric Dinallo.