SEC is examining ties between Avici and Qwest

Comments | Deseret News (Salt Lake City), Nov 14, 2003 | by Associated Press

DENVER -- Avici Systems, a maker of network routers for Internet traffic, disclosed that federal regulators are also investigating its relationship with Qwest Communications International Inc.

Avici is the third network equipment supplier and 11th company overall whose dealings with Qwest have come under scrutiny in a broad probe by the Securities and Exchange Commission.

Redback Networks and Tellium Inc. have previously made similar disclosures that the SEC is examining their interactions with Qwest, the dominant provider of local telephone service across the Rocky Mountain and Northwest regions.

In those cases, the investigation has appeared to focus on whether former Qwest executives induced the suppliers to give them stock in exchange for purchasing equipment.

Regulatory filings show that Anschutz Family Investment Co., controlled by Qwest founder Philip Anschutz, acquired private shares in Avici in 1998.

Within a month of those transactions, Qwest said it would be testing equipment from Avici. And in October 2000, shares of Avici rose as much as 18 percent on the same day it was announced Qwest had agreed to buy Avici routers.

"To the best of our knowledge, the investigation deals with people who were in a potentially conflicted situation," Anschutz Co. spokesman Jim Monaghan said Wednesday. "Neither the Anschutz Co. nor any of the (Qwest) board members were in a conflicted position such as making day-to-day decisions such as purchasing."

Qwest spokeswoman Rebecca Tennille declined to comment other than to say the company was cooperating with investigators.

Avici, based in North Billerica, Mass., disclosed the Securities and Exchange Commission investigation in a regulatory filing Wednesday.