The Commission concluded its litigation with two of the remaining defendants in its suit which centered on a financial fraud at Qwest Communications from early 1999 through 2002. The case gained notoriety because of the high profile insider trading conviction of defendant Joseph Nacchio. SEC v. Nacchio, Civil Action No 05-cv-480 (D. Colo.).

The action named as defendants Qwest’s chief executive officer Joseph Nacchio, CFO Robert Woodruff, president and COO Afshin Mohebi, director of financial reporting James Kozlowski and senior manager and then director of financial reporting Frank Noyes.

The complaint focused on what it called a massive fraud which concealed the true source and nature of Qwest’s revenue and earnings growth. During the time period Qwest touted its claimed growth in service contacts that were suppose to provide a continuing revenue stream. In fact the revenue of the company came from a one time sales of assets and certain equipment. The complaint also alleged that the performance and growth of the company was misrepresented to the public.

Perhaps the center piece of the action was the civil and criminal insider trading claims against Mr. Mr. Nacchio. In the criminal case Mr. Nacchio was convicted of insider trading and is currently in prison.

This week the Commission settled with Mr. Woodruff and dropped all charges against Frank Noyes. Mr. Woodruff consented to the entry of a permanent injunction without admitting or denying the allegations in the complaint, prohibiting future violations of Securities Act Section 17(a) and Exchange Act Sections 10(b) and 13(b)(5) and from aiding and abetting violations of Sections 13(a) and 13(b)(2). In addition, he agreed to pay disgorgement of $1,731,048 along with prejudgment interest and a civil penalty of $300,000. He will also be barred from serving as a director or officer of a public company.

The Commission took the unusual step of dismissing all charges against Mr. Noyes. The complaint alleged that he violated the same sections cited in the injunction entered against Mr. Woodruff. The lengthy complaint however barely mentions Mr. Noyes in its detailed description of the fraud. The few passages which reference Mr. Noyes claim that he failed to ensure that Qwest’s filings adequately disclosed certain revenue and that he did not implement proper procedures to ensure revenue from certain sales was appropriately recognized. Now after almost seven years the litigation has ended for Mr. Noyes.