Professor Daniel Fischel Begins Testimony Concerning Nacchio Trading Patterns.

In the midst of some speculation as to whether Mr. Nacchio would take the stand in his own defense the answer to that question was put off, and to this point still unanswered, as the court attended a matter concerning a juror, several motions, and the testimony of Professor Daniel Fischel.

Judge Nottingham brought to the attention of the court that last week, Juror # 5, while riding in the court's elevator, was asked how she believed the case was going by someone who was apparently a member of the press. Judge Nottingham offered a suggestion to bring the lone juror into court and openly question her. However, after a brief discussion it was concluded to handle the matter “in chambers.”   After a brief 10 minute discussion "in chambers," court resumed with Judge Nottingham asking spectators to refrain from riding in any elevators where jurors were present. 

On this mornings calendar, the court dealt with several motions filed over the weekend.  One of the motions involved the scope of testimony of Daniel Fischel.  The defense wanted his testimony to rebut "opinion" testimony by two analysts called by the government.  Judge Nottingham took the issue under advisement but indicated, from a preliminary review of the direct testimony of one of the analysts, that there was no opinions to rebut. 

The other motion involved a document containing notes about a conversation between a lawyer at Qwest and David Weinstein, a financial advisor to Mr. Nacchio, that goes to the backdating issue.  Last week, Judge Nottingham seemed to condition admissibility on the Defense's decision to bring Weinstein back, thereby giving the government a chance to question him about it.  The Defense, however, announced in court that they did not intend to call Mr. Weinstein.  Judge Nottingham indicated that he would admit the memorandum but invited the government to call Mr. Weinstein.  A discussion occurred over the logistics of calling Weinstein (Judge Nottingham indicated that he was still under subpoena).  Mr. Stern raised concerns over the scope of any examination, apparently concerned about additional exploration of "bad acts" by Mr. Nacchio.

The defense called Professor Daniel Fischel as its first witness.  Professor Fischel’s testimony went about methodically reviewing Mr. Nacchio’s option trading history over the period of 1998 through the 1^st and 2^nd Quarters of 2001. Professor Fischel maintained that Mr. Nacchio did not deviate significantly from year to year in the total percentage of options exercised. Moreover, in the time period that the government has charged Mr. Nacchio with insider trading, Professor Fischel testified that Nacchio exercised less of his available options, 33%, compared with as high as 52% in one of the prior years. Further, Professor Fischel testified that Nacchio related entities, during the period in question, made no sales of direct holdings by these entities.

Under cross examination, Mr. Traskos went about questioning Professor Fischel about the way his material had been presented. He got Professor Fischel to acknowledge that in some instances, Mr. Nacchio exercised options but did not sell the underlying shares.  Mr. Traskos also got Professor Fischel to admit that Mr. Nacchio exercised roughly 3 times the number of options in the first four months of 2001 than he had in the same period the prior year.   He also got Professor Fischel to admit that his charts did not include the sale of approximately 350,000 shares in 2001 that had been received as payment in connection with Mr. Nacchio's growth shares (something Professor Fischel repeatedly contended would be misleading to have done).

The redirect of Professor Fischel will be this afternoon.