Alliance@IBM, which is looking to unionize IBM's U.S. work force, is asking the SEC and DOJ to investigate all IBM executives in the wake of hardware chief Robert Moffat's arrest in connection with a $25 million insider trading scheme. Alliance@IBM also is running a poll asking people whether IBM executives should be investigated.
A group that is looking to unionize IBM's U.S. workers is using the arrest Oct. 16 of hardware chief Robert Moffat on insider trading charges
to ask federal regulators to investigate all company executives.
Alliance@IBM, which comprises current and former IBM employees, has
been highly critical of the company's labor practices, including layoff
policies, the shipping of U.S. jobs to other countries and executive
pay during the global recession.
In an open letter
its Website to the Securities and Exchange Commission and Department of
Justice, the group is asking regulators to investigate all IBM
executives to ensure they're following IBM ethics guidelines. The group
also is asking for investigation into the timing of all executive stock
option sales and into any insider trading allegations.
Alliance@IBM also is running a poll on its site, asking whether IBM
executives, in light of Moffat's arrest, should be investigated by
federal regulators. As of mid-morning Oct. 22, 459 people have said
yes, 174 have said no, and one person was unsure.
Moffat is a 31-year IBM veteran and currently senior vice president
and group executive of the company's Systems and Technology Group,
which includes the company's $20 billion hardware business. He was one
of six people charged Oct. 16 in an insider trading scheme that
investigators said resulted in $25 million in illegal gains.
In particular, Moffat is accused of giving information
Danielle Chiesi, a friend and portfolio manager at hedge fund New
Castle Funds, in 2008 and 2009 regarding IBM finances, Sun
Microsystems's finances and IBM's interest in buying the rival hardware
maker, and chip maker Advanced Micro Devices' dealings with two Abu
Dhabi companies that resulted in AMD spinning off its manufacturing
business to create Globalfoundries.
IBM has placed Moffat on leave and also was removed as an officer of
the company. Moffat's lawyer has claimed his client's innocence.
IBM has declined to comment on the case.
In its open letter, titled "A Call to Investigate," Alliance@IBM
says that Moffat's case is only the latest example of executive greed
at the company, and is particularly concerning considering Moffat's
stature and the belief by some that he was seen as a strong candidate
to eventually take over for CEO Sam Palmisano.
The investigation nabbed managers at two hedge funds, New Castle and
Galleon Management, as well as a director with McKinsey and Co. and
Rajiv Goel, an executive with Intel's treasury unit.
Goel allegedly gave Raj Rajaratnam, founder and managing partner of
hedge fund Galleon Management, information on Intel finances and
Clearwire, a wireless company that Intel had invested in.
Goel has been placed on administrative leave by Intel. Intel
executives say the company knew nothing of Goel's alleged actions or
the federal investigation, and is conducting an internal probe of its
IBM has had its share of legal troubles of late. Apart from the Moffat case, federal investigators reportedly are looking into IBM's mainframe business
for possible antitrust violations.