The jury deliberating the Joe Nacchio case today asked the Judge for the legal definition of “materiality.” Rather than re-read just that instruction, Judge Nottingham re-read all of the instructions.
In regard to the jury’s question about materiality, Nottingham said information is material if it is of such importance it reasonably could be expected to cause a person to act or not to act, or if a reasonable investor would consider the information important in deciding whether to act. The material information may be a misstatement or an omission of facts, he said. ….Prosecutors argued at trial that the material, nonpublic information Nacchio had was that Qwest was relying too much on one-time transactions to make its numbers, and that the deals were not enough to sustain projected 2001 revenues.
The Denver Post has the jury instruction on materiality here (pdf.) Has the jury already determined Nacchio sold his stock on the basis of insider, non-public information and now trying to determine whether the information was material? Or, are they first trying to decide whether the information was material before deciding whether it was a significant factor in Nacchio’s decision to sell his stock? If the information isn’t material, then it wouldn’t matter whether he considered it in deciding whether to sell. The jury also has to decide whether Nacchio sold his stock with the intent to defraud or in good faith.
If the evidence in the case leaves you with a reasonable doubt as to whether Mr. Nacchio acted with the intent to defraud or in good faith, you must acquit him.
They have also been instructed (pdf) that “Good motive alone is never a defense where the act done or omitted is a crime.” Time will tell.