Suspended Hardware Boss Leaves IBM

The fallout from the insider trading scandal continues after the news that the IBM hardware boss, Robert Moffat, who was charged last month by the SEC for involvement in an insider trading scheme, has now left the company.

Moffat was the former head of IBM’s $20 billion (£12 billion) hardware business and had been placed on leave after being charged with giving confidential information regarding IBM, Advanced Micro Devices and Sun Microsystems to a hedge fund manager. He has now reportedly retired.

Meanwhile, it has also been announced that former AMD Hector Ruiz is no longer chairman of Globalfoundries, 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 non public 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 in mid October 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 Sun finances.

Moffat will be replaced by Rod Adkins, who was appointed on an interim basis after the charges were first levelled 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 AMD.

In a brief statement today, 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 4 January, according to the company.

There was no mention of the insider trading scandal in the Globalfoundries statement.

Ruiz will be replaced on an interim basis by Alan “Lanny” Ross, a current board member and former president and CEO of Broadcom.

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.