The insider trading scandal that investigators said generated $25 million in illegal profits has continued to roil at the high-tech firms involved. Robert Moffat, a high-ranking IBM executive who had been seen as a possible future CEO at the company, has left IBM, and former AMD CEO Hector Ruiz is stepping down as chairman of Globalfoundries. In addition, Intel has hired a law firm to conduct an internal investigation connected to the case, which has led to charges against Rajiv Goel, an executive with Intel's treasury department.
The fallout from the $25 million insider trading scandal that included the
arrests of executives from IBM and Intel is
Robert Moffat, the former head of IBM's
$20 billion hardware business who had been placed on leave after being charged
Advanced Micro Devices and Sun Microsystems to a hedge fund manager, is no
longer with the company after reportedly retiring.
That news was followed by the announcement Nov. 2 that former AMD
Hector Ruiz is no longer chairman
, the chip manufacturing company created in a joint
venture between AMD and ATIC (Advanced
Technology Investment) of Abu Dhabi.
Investigators have not named Ruiz in connection with the case, but published
reports say he is the unnamed "AMD
executive" talked about in court documents.
In addition, Intel has hired San Francisco
law firm Orrick, Herrington and Sutcliff to conduct an internal investigation.
Rajiv Goel, an executive with Intel's treasury group, is charged with giving
nonpublic information regarding Intel's finances and Clearwire-a wireless
company in which Intel had invested-to hedge fund Galleon Management. Goel was
placed on administrative leave after he and five others were charged Oct. 16 in
connection with the insider trading scheme.
Intel executives have said they had no knowledge of the federal government's
investigation until the charges were filed in October, and promised cooperation
with prosecutors. They also had promised their own internal investigation,
which will be led by Orrick, Herrington and Sutcliff.
Moffat, the former senior vice president and group executive of IBM's
Systems and Technology Group, at one time was considered by industry observers
as a possible replacement for current CEO
Sam Palmisano. The 31-year IBM veteran
allegedly gave Danielle Chiesi, a portfolio manager at hedge fund New Castle
Funds, information concerning IBM finances
and AMD's deal with ATIC. In addition, he is
charged with giving Chiesi, whom investigators with the Securities and Exchange
Commission and the FBI said was a personal friend of Moffat, information
concerning IBM's interest in buying Sun and
Moffat will be replaced by Rod Adkins, who was appointed on an interim basis
Oct. 19 after the charges were first leveled against Moffat. Adkins, who has
been with IBM for almost 30 years, has
worked in such areas as IBM's systems
development, desktops and Unix-based servers.
In court documents filed in connection with the case, Department of Justice
prosecutors refer to an unnamed AMD
executive who also allegedly gave Chiesi information regarding the AMD-ATIC
deal. In a story based on unnamed sources, the Wall Street Journal
reported last month that the unnamed AMD
executive was Hector Ruiz, the former CEO of
In a brief statement Nov. 2, Globalfoundries said Ruiz is taking a
"voluntary leave of absence" as chairman of the company and will resign from
the company in January 2010. Ruiz had submitted his resignation in September,
with the effective date being Jan. 4, according to the company.
There was no mention of the insider trading scandal in the Globalfoundries
Ruiz will be replaced on an interim basis by Alan "Lanny" Ross, a current
board member and former president and CEO of
Along with Moffat, Goel and Chiesi, others charged in the case are Anil
Kumar, a director at McKinsey & Co.; Raj Rajaratnam, founder and managing
partner of hedge fund Galleon Management; and Mark Kurland, a senior managing
director and general partner at New Castle.
In addition, Galleon and New Castle
also were named in the case.