In what marks the first time a corporate executive has been penalized for participating in the practice known as IPO spinning, former Quest Communications International Inc. Chairman Phillip F. Anschutz has agreed to pay a $4.4 million settlement.

IPO spinning is the name given to the strategy employed by investment banks that reward corporate executives for letting the banks offer the company's initial public offering by giving company executives shares of the IPO.

New York State Attorney General Eliot Spitzer has made it his personal objective to end the practice of IPO spinning. Last fall his office filed suit against Mr. Anschutz and four other telecom executives for participating in IPO spinning schemes. The other executives charged and still under investigation include former WorldCom Inc. CEO Bernie Ebbers, former Qwest CEO Joseph Nacchio, former McLeod Chairman Clark McLeod, and Metromedia Fiber Chairman Stephen Garofalo. Mr. Spitzer expects to collect a total of $28 million from the five executives.

Mr. Spitzer has been investigating several conflicts of interest regarding stock analysts and investment banking firms. "The spinning of hot IPOs shares was not a harmless corporate perk," said Mr. Spitzer last fall. "Instead, it was a reward for investment banking business."

Mr. Anschutz, who, according to Forbes magazine, is worth $4.9 billion, has agreed to pay $1.2 million to six New York law schools for the purpose of funding securities arbitration clinics, and he will give $3.2 million to other not-for-profit groups that benefit New Yorkers, including an investor assistance fund. The amount of the payments is approximately equal to the amount by which Mr. Anschutz profited in the spinning scheme. As part of the settlement, Mr. Anschutz is not required to admit guilt.

The IPO spinning situation is not the only headache at Qwest Communications. Qwest has been in the news lately for its controversial restatement of 2000 and 2001 financial statements. While former auditor Arthur Andersen staunchly stands behind the originally reported amounts, new auditor KPMG has asked Qwest to restate as much as $2.2 billion in revenue for the two year period relating to the way in which non-monetary trades of fiber-optic lines with other carriers were booked. Although Andersen memos at the time referred to the accounting practice as "aggressive," the former Big Five accounting firm argues that the traded equipment was valued at comparable market prices and that the financial statement values were appropriate.