[JURIST] Former telecommunications executive Clark McLeod has agreed to pay $4.4 million to settle a lawsuit brought by New York Attorney General Eliot Spitzer [official profile], Spitzer's office announced [NY AG press release] Monday. Spitzer filed the lawsuit [complaint, PDF; AG press release] in 2002, alleging that McLeod, former chairman and CEO of McLeodUSA Inc. [corporate backgrounder], had received stock in 34 companies before their initial public offerings in exchange for directing $77 million of his company's money to the investment bank Salomon Smith Barney. The practice, known as IPO "spinning," has been banned since Wall Street firms agreed to a settlement in 2003. A New York State trial judge entered a summary judgment against McLeod [order text, PDF; AG press release] in February, calling spinning a "sophisticated form of bribery." The settlement averts a hearing in which the judge would have considered how much McLeod should have paid in damages and restitution.
The settlement ends Spitzer's involvement in a string of spinning cases. He has reached settlements from four other telecommunications executives, including Bernard Ebbers [JURIST news archive] of WorldCom Inc. Spitzer said he would distribute the settlement money to New York law schools' securities arbitration clinics for small investors. "IPO spinning was a deceptive, avaricious game played to benefit a few CEOs at the expense of shareholders," Spitzer said. "As a result of these cases, this practice has been banned and a significant amount of money disgorged to benefit the public." AP has more.