A federal appeals court in Denver on Friday ordered a reduced prison term for Joseph Nacchio, the former Qwest Communications chief who had been sentenced to six years for insider trading.
The U.S. 10th Circuit Court of Appeals ruled that the trial court had overstated Nacchio's stock market gains and he was therefore entitled to resentencing, according to court documents.
"On remand, the district court should focus on arriving at a figure that more closely approximates Mr. Nacchio's gain resulting from the offense of insider trading," the ruling read (PDF).
Nacchio, who served as the phone company's CEO from 1997 until 2002, was convicted in April 2007 on 19 of 42 counts of insider trading. Prosecutors said Nacchio had profited from selling $101 million worth of Qwest shares after insiders had told him the company could not meet financial targets. In addition to his prison sentence, he was fined $19 million and ordered to forfeit $52 million, an amount that could also get reduced.
Nacchio, who hasto the Supreme Court, has been serving his term since April at a Pennsylvania prison.
Friday's order didn't calculate a sentence length, but gave instructions to the sentencing court: "Mr. Nacchio's increased prison sentence should be linked to the gain actually resulting from the offense, not to gain attributable to legitimate price appreciation and the underlying inherent value of the Qwest share," the court wrote.