TigerSoft - TigerSoft - www.tigersoft.com 12/28/2007 --- by William Schmidt, Ph.D.
Insider Trading: News and Reviews: Articles Found on the Net
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Do You Trust Your CEO To Give You Honest Earnings' Reports?
INSIDER TRADING AT QWEST.
HOW TO SPOT IT REAL-TIME USING TIGERSOFT.
QWEST was a telephone company. It was considered a "widows and
orphans" stock. But Its bosses simply stole their public shareholders' money.
That is what a jury in Denver decided last year. Wall Street does not want
you to read about its crooks, its grand thefts, its fiascoes and the paltry fines and
meager penalties those that are caught actually pay. Wall Street wants you to
believe your stocks' earnings reports and trust that the SEC will prevent egregious insider
trading. Such faith and trust are badly abused by Wall Street. To survive and
prosper in the Wall Street jungle, you must be cynical. You must be distrustful.
And we say, you must use software like ours to monitor for the unmistakable signs
of insider trading.
Qwest, Imclone, Enron, Arthur Anderson, Global Crossing, AOL-Time Warner, Tyco,
Adelphia, Citigroup...These are just the best known cases of ruthless false corporate
books, CEO lies and massive insider selling in just 2001-2002. TigerSoft shows false
PR reports, CEO lies and insider trading are par for the course in every era. As long as the
greediest CEOs and their henchmen on the Board of Directors can make the biggest
(and tax deductible) campaign contributions to politicians and political parties, nothing
much will change, no matter which Party wins.
The Republicans are at least honest about their outright defending giant
corporations. Most Democrats are not. They will say they are the party of the "people,
not big business". But when you look up their corporate campaign contributions
and ask them about them, they will say: "Well, it just costs so much these days to run
a political campaign, we have to accept this money.")
So, you must use software like TigerSoft to get at the truth, to see what
Big Money is really doing, rather than what they are telling their shareholders.
The System Is Breaking Down.
CEO and Corporate Board Member salaries are the highest they have
ever been. They tower over their workers' pay as never before. But even this
does not satisfy their greed. As the Bubble of the 1990's grew, too many CEOs routinely
boosted their stock's prices by inflating earnings before selling their own stock.
When they could get their stock's earnings supposed growth up to 20% or more
per year, their stocks became Wall Street darlings. These CEOs got about half their
compensation in the form of stock options. This gave them a built-in incentive to
mislead their shareholders, the "windows and orphans" and engage in their own
form of "pump and dump. A Pennsylvania university study stated "Qwest was
"emblematic" of this pattern..
CEO's, like Qwest's Joseph P. Nacchio imposed a reign of terror and
"set required internal revenue targets on the numbers necessary for
Qwest to meet the public growth predictions rather than on revenues
that a particular business could reasonably expect to achieve...Nacchio
then exerted extreme pressure on subordinate executives to achieve the
targets....Qwest insured that company and business unit targets were met by paying
bonuses to management and employees for periods when they achieved the
targeted revenue and threatened consequences if targets were not met...Nachio
had an explosive temper. One senior executive, in describing Nachhhio's
interaction with subordinates, explained that 'people (were) just afraid of the man'"
( Quoted from Steven Huddart and Henock Louis:
http://www0.gsb.columbia.edu/null?exclusive=filemgr.download&file_id=644938 ).
A good book to read is William G, Flanagan - How CEOs Are Fleecing America.
QWEST and The Illegal INSIDER SELLING of Its CEO.
In 2005, the U.S. Justice Department on Tuesday indicted the former head of Qwest Communications
on 42 counts of insider trading, accusing him of illegally selling off $101 million in stock, and making a
$42 million profit. Nacchio was convicted in April, 2007 of 19 counts of insider trading, after a jury
concluded he sold $52 million worth of stock when he knew the telecom was at financial risk -- but didn't tell
investors. But as of December 18, 2007 he remains free upon appeal to the 10th US Circuit Court of
Appeals in Denver.
"According to the indictment, from January through May of 2001, Mr. Nacchio, while in possession of material, non-public information about the financial health of Qwest,
accelerated the sales of Qwest stock and sold in excess of $100 million worth of Qwest common stock in
violation of insider trading laws," said U.S.Attorney Bill Leone, during a noon news conference detailing the
indictments. The indictment states that "Nacchio knew this policy, was repeatedly reminded of it and was
advised that selling... was a crime." The indictment blames Nacchio for "a manipulative and deceptive"
scheme to commit fraud and says he was "specifically and repeatedly warned" about the financial risks
facing his company just five months before the stock trades in question.
At least six other former Qwest executives have been indicted in the last three years. In 2003, Grant Graham,
Thomas Hall, John Walker and Bryan Treadway were indicted in an alleged scheme to fake $33 million in revenue
for Qwest. Graham and Hall pleaded guilty under plea bargains. Walker and Treadway were acquitted at trial.
This year, there was more trouble. In February, former Qwest executive Marc Weisberg was indicted on wire
fraud and money laundering charges. He was accused of trying to personally profit from investment opportunities
at the expense of Qwest and its shareholders. And in July Qwest's former Chief Financial Officer Robin Szeliga
pleaded guilty to one count of insider trading in federal court, admitting to improperly selling 10,000 Qwest shares
in 2001.
Qwest said it late July, 2003 that it will file restate financial reports for 2000 and 2001 because an internal
analysis found accounting errors. "CEO Joseph P. Nacchio sold 2 million shares of Qwest stock
in the first half of last year (2001), realizing $74.6 million. That was slightly more shares than he
sold in all of 2000. And on May 2, 2001, Qwest founder Philip F. Anschutz sold roughly 10 million
shares for $408 million, according to SEC filings. The sales have angered Qwest employees. In
early March, workers filed two lawsuits, claiming they were encouraged to keep their retirement
savings in company stock even as top execs sold hundreds of millions of dollars in shares..."
The timing of the sales was critical because they occurred just before Qwest's stock collapsed.
"The company's shares held up better than the rest of the telecom industry during the
first half of last year, largely because Nacchio insisted that Qwest could outpace its rivals in
revenue and earnings growth. But in the second half, the company stumbled. On Sept. 10,
Nacchio conceded that Qwest would not meet its revenue and growth targets for the year and for
2002. The SEC's investigation involves accounting practices Qwest used that made its financial
performance look good through the middle of last year. "
( http://www.businessweek.com/magazine/content/02_12/b3775096.htm )
Unbridled Greed
Qwest will pay ousted chief executive officer Joe Nacchio $1.5 million in each of the next two years for
unspecified "consulting work." The consulting pay is in addition to Nacchio's $10.5 million severance package
and his retention of thousands of stock options. Sources said this week that it is unlikely Nacchio will do much
consultation for Qwest, outside of occasionally testifying at the request of federal agencies investigating Qwest's
accounting practices. Experts estimate Nacchio's total compensation in 2002 at $87 million, despite the drop in the
stock price from 45 to 1!. Nacchio received a $1.5 million bonus last year, down from a $2.3 million bonus the
year before. He also received $24.4 million in long-term incentives last year.
(Source: http://www.thedenverchannel.com/money/1600802/detail.html )
( http://www.thedenverchannel.com/money/1600802/detail.html )
12/27/2007 - QWEST and Insider Selling by former CEO Joe Nacchio
Previous Stories:
- March 20, 2007: Opening Statements Kick Off In Joe Nacchio Trial
- March 19, 2007: First Day Of Jury Selection Wraps Up In Nacchio Trial
- December 20, 2005: Nacchio Indicted On 42 Counts Of Insider Trading
- October 2, 2002: Former Qwest Exec Grilled Over Business Dealings
- August 8, 2002: Qwest Posts $1.1 Billion Loss
- June 17, 2002: Nacchio Out As Qwest CEO
QWEST TigerSoft Charts July 2000-June 2001
TigerSoft Users Would Have Sold Out (and Sold Short)
TigerSoft spots insider selling mainly by watching the Tiger Accumulation Index. Its dropping below -.25
when the stock is under-performing the DJI (representing the general market) is the primary way we do this.
The TigerSoft S12 shows the under-performance has reached extreme levels. Insiders often have to just dump
their shares, rather than distribute them carefully through steady and patient selling. We pick up on this when
the volume surges on down days and when the cumulative On-Balance-Volume (OBV) Line makes new
lows, often ahead of price. You can see below both types of insider selling as Qwest's stock dropped from
60 to 1.07 in 18 months.
============================= QWEST 2001 =========================================
============================= QWEST 2001 ========================================
=================== QWEST - July 2001 to July 2002 ====================================
