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Yes, he's expected to "take the financial hit." It is illegal for insiders to trade on secret information. You're not thinking it through carefully: Nacchio defrauded whomever bought his shares at their inflated price.

I'm completely aware the legally subservient option is to "take the financial hit". You're not think it through carefully, I just don't see that as a particularly relevant or salient point, the law is just an arbitrary set of rules the biggest bully has put in place, they probably congratulated themselves on a clever ploy putting him between a rock and a hard place rather than considering whether what they were doing and if the law was sane and gag orders attached to business negotiations with millions of dollars worth of personal repercussions for people under intense pressure to submit to the state was acceptable

I am not smart enough to understand how anything NSA did could have justified Nacchio defrauding his shareholders by willfully and knowingly selling them stock in his company at an inflated price.

Neither, it seems, was the court.

In my humble opinion, the least morally questionable action to take in this scenario would have been to ignore the gag order, explain in public why the business was being lost, and take the rational sale option because of it.

Even this option isn't that great from his perspective though, I don't know what the penalty on breaking those gag orders is, I guess it's more than the penalty for insider trading?

They put him in a situation with a stack of bad options and even the best ones weren't that great, sitting back and criticising his actions after the fact whilst laying none of the blame on the people and institutions that created the situation is something I'm not smart enough to understand why you think is an acceptable analysis to take?

He committed a fraud. Not against the government. Against his own shareholders. He sold equity in Qwest at prices he knew were not reflective of the underlying value of the stock, based on actual actionable secret information available to him as a company insider. That's a crime, as it should be.

NSA shouldn't pressure people to comply with gag orders, but that doesn't excuse Nacchio from choosing to harm his own shareholders simply to make additional tens of millions of dollars over what he already had. You can come up with 1,000 different ways to rephrase what you said; it will never convince me that multimultimultimillionaires should be excused for defrauding their own shareholders to increase their own bank balances.

> NSA shouldn't pressure people to comply with gag orders, but that doesn't excuse Nacchio

I agree with you, I just think what the state did was worse. Not only that but that kind of behaviour is par for the course for them rather than an exception to the rule that they resorted to in order to deal with a situation not of their own creation.

You are right though, he was no angel.

wavefunction 4753 days ago

Wondering if he knew he was going to get railroaded and decided to both build up some cash reserves via "insider trading" and do the "right thing" at the same time wrt by declining to cooperate.

At a guess he took a gamble, he made 3 million in salary in 2000, so the amount he sold was not trivial, even for him, he may have thought the government would not attempt to prosecute him, he may have thought if it came to trial the court would throw it out under the circumstances, he probably made a cost benefit analysis and acted upon it and ended up on the wrong side.

That's life.

EDIT: Interesting that this is downvoted, are you taking it as an indication that I'm attempting to say he got what he deserved with the above? That is not my intention, I'm simply pointing out that when you fight a bully, you often get a broken nose.

jessaustin 4753 days ago

He also thought that he was safe doing what the vast majority of CEOs do on a regular basis. At the time of the stock sales he didn't realize just how much he was going to piss off the NSA in the next couple of years, much less how obedient federal prosecutors are to the NSA. It is impossible to become CEO of an ILEC without collecting a vast array of assets vulnerable to official attack. Nacchio might well have decided that the price he has paid was worth a clean conscience.

(I don't really think execs should be compensated with stock, but since they are you know they're going to be selling it regularly. Should they be prosecuted every time the price drops? Of course not, in fact they are almost never prosecuted.)

I'm not sure why I'm expected to give a shit that lots of other CEOs are defrauding the public alongside people like Nacchio.

jessaustin 4753 days ago

Hahaha, too true. "Insider trading" is totally a made-up crime, intended more for the selective-enforcement convenience of our superiors in the Justice Department than for "the public". If the public wasn't so damn greedy, they'd invest in T-bills like good subjects. Leave the "high-yield" investing for those who are in the loop. That way NSA staff and their friends in Congress and on K Street can get all the money there is to be made by trading on their contract decisions.

If you want to argue that the USG should be more aggressively enforcing insider trading laws so as not to make extremely egregious violations look like selective enforcement, I'm right there with you. Otherwise, spare me the sob story that's attempting to rehabilitate the image of outrageously wealthy people who have committed fraud.