Qwest agreed to pay $250 million to settle securities fraud charg...
Qwest agreed to pay $250 million to settle securities fraud charges, the Securities & Exchange Commission said Thurs. The company settled without admitting or denying the allegations. The SEC has been investigating whether Qwest inflated revenue by incorrectly booking…
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network capacity deals to improve the company’s image with Wall St. in 1999-2002. The agency charged Qwest “fraudulently recognized over $3.8 billion in revenue and excluded $231 million in expense as part of a multi-faceted fraudulent scheme to meet optimistic and unsupportable revenue and earnings projections.” The SEC said the payment would be distributed to investors. Qwest also will be required to permanently maintain a chief compliance officer reporting to a committee of outside directors and responsible for making sure the company “conducts its business in compliance with the federal securities laws.” Randall Fons, dir. of the SEC’s central regional office in Denver, said “Qwest senior management created a corrupt corporate culture in which meeting Wall Street expectations was paramount.” Qwest Chmn. Richard Notebaert said the settlement concludes a 2-1/2 year investigation of the company and “will now allow us to focus even more of our effort to provide exceptional value and service to customers.” Company management turned over in 2002.