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One of the technology industry's highest-profile executives has become ensnared in an alleged insider-trading case that is shaking the corporate and financial worlds.
A criminal case filed by the Manhattan U.S. Attorney's office earlier this month alleged an unnamed Advanced Micro Devices Inc. executive shared confidential information about the chip maker with a defendant in the case. The AMD executive is Hector Ruiz, then AMD's chairman and previously the company's chief executive, according to a person familiar with the matter.
Wow. I wonder how this will play out. Ruiz is currently chairman of Globalfoundries, the fab spin-off of AMD.
"One of America's wealthiest men and two South Bay execs were among six hedge fund managers and corporate executives arrested today in a hedge fund insider trading case that prosecutors say reaped more than $20 million in illegal profits and should be a wake-up call for Wall Street.
Raj Rajaratnam, a partner in Galleon Management and a portfolio manager for Galleon Group, a hedge fund with up to $7 billion in assets under management, was accused of conspiring with others to trade based on insider information about several publicly traded companies, including Google Inc.
The South Bay men arrested were Rajiv Goel, 51, of Los Altos, a director of strategic investments at Intel Capital, the investment arm of Intel Corp., and Anil Kumar, 51, of Santa Clara, a director at McKinsey & Co. Inc., a global management consulting firm."
"One of America's wealthiest men and two South Bay execs were among six hedge fund managers and corporate executives arrested today in a hedge fund insider trading case that prosecutors say reaped more than $20 million in illegal profits and should be a wake-up call for Wall Street.
Raj Rajaratnam, a partner in Galleon Management and a portfolio manager for Galleon Group, a hedge fund with up to $7 billion in assets under management, was accused of conspiring with others to trade based on insider information about several publicly traded companies, including Google Inc.
The South Bay men arrested were Rajiv Goel, 51, of Los Altos, a director of strategic investments at Intel Capital, the investment arm of Intel Corp., and Anil Kumar, 51, of Santa Clara, a director at McKinsey & Co. Inc., a global management consulting firm."
Yeah right, the exact same thing.
A former AMD CEO and current Globalfoundries chairman vs a manager in Intel's investment group.
Intel immediately suspended Goel and initiated its own investigation when the news broke (which IBM similarly did for Moffat, their senior VP implicated in this scandal).
AMD/Gloflo has been silent ever since the news came out that a senior AMD executive was implicated in divulging inside information on the Abu Dhabi deal to hedge fund outsiders.
SAN FRANCISCO (MarketWatch) - Advanced Micro Devices /quotes/comstock/13*!amd/quotes/nls/amd (AMD 4.94, -0.21, -4.08%) on Wednesday said the chip giant was looking into insider trading allegations involving former Chief Executive Hector Ruiz. "We are investigating the situation, but we don't have any more detail to discuss publicly," spokesman Michael Silverman said in an e-mail. "No current or former AMD employee has been charged with a crime and we're not aware of any allegation of criminal misconduct. It would be inappropriate to comment further on an ongoing Department of Justice investigation."
No public comment, acknowledgement, or action to suspend Ruiz from Globalfoundries yet.
Give it time. According to the charges "the AMD executive" provided "Inside Information" to Chiesi (24 d, 28 b, 28 d, 28 j, 28 k, 28 r). The last one, 28 r, implies "the AMD executive" was taped making a phone call to Chiesi ("Landline A"). Methinks "the AMD executive" needs a damn good lawyer right about now. :-P
Give it time. According to the charges "the AMD executive" provided "Inside Information" to Chiesi (24 d, 28 b, 28 d, 28 j, 28 k, 28 r). The last one, 28 r, implies "the AMD executive" was taped making a phone call to Chiesi ("Landline A"). Methinks "the AMD executive" needs a damn good lawyer right about now. :-P
Amplifying noise again?
Danielle Chiesi was introduced to Hector Ruiz by IBM's Senior Vice president Robbert Moffat in the context of the IBM-AMD talks about the Abu Dhabi deal.
Since the phone calls were recorded and no indictment was made against Ruiz it seems pretty unlikely that Ruiz was aware of the motives of Robbert Moffat and Danielle Chiesi.
Post subject: Re: WSJ: AMD leaker linked to Galleon scandal is Hector Ruiz
Posted: Thu Oct 29, 2009 7:01 am
Joined: Sun Nov 18, 2007 9:33 am Posts: 80 Location: Denmark
Hans de Vries wrote:
Danielle Chiesi was introduced to Hector Ruiz by IBM's Senior Vice president Robbert Moffat in the context of the IBM-AMD talks about the Abu Dhabi deal.
Since the phone calls were recorded and no indictment was made against Ruiz it seems pretty unlikely that Ruiz was aware of the motives of Robbert Moffat and Danielle Chiesi.
Regards, Hans
Jup, from what I've read this is also my understanding. But damn people that high up in the management layers should be whipped in public for doing insider trading.
And that Moffat guy, what did he get out of it ? Sex ? Money ?
Post subject: Re: WSJ: AMD leaker linked to Galleon scandal is Hector Ruiz
Posted: Thu Oct 29, 2009 2:27 pm
Joined: Wed Aug 29, 2007 3:55 pm Posts: 801 Location: Great white north
Whether Ruiz ultimately gets charged or sued or not it is yet another example of his unprofessionalism and poor character. Even JSIII, the guy who chose him as successor, is flabbergasted by Ruiz's lapses
The revelation that Hector Ruiz, former CEO of Advanced Micro Devices, allegedly leaked confidential information about his company in the biggest hedge-fund insider trading case in history has left many Silicon Valley colleagues shocked and mystified at his reported involvement.
"It just doesn't make sense," said Jerry Sanders, AMD's co-founder and the company's CEO before Ruiz assumed that job in 2002. "People make dumb mistakes — talk show hosts having sex with subordinates, at least I understand the sex drive. I don't understand this. You just don't talk about things that aren't public. You don't talk to people about insider information, whether you benefit from it or not."
I guess if hardcore AMD fanboys can forgive Ruiz for his end game destruction of AMD by grossly overpaying for ATI and overseeing the dismantling of AMD as an integrated device manufacturer by selling off its fab infrastructure they will dismiss a simple matter of dereliction of corporate fiduciary duty as a trifle.
Post subject: Re: WSJ: AMD leaker linked to Galleon scandal is Hector Ruiz
Posted: Thu Oct 29, 2009 4:01 pm
Joined: Tue Aug 07, 2007 11:57 am Posts: 181
Paul DeMone wrote:
http://www.mercurynews.com/business/ci_13663296?nclick_check=1 The revelation that Hector Ruiz, former CEO of Advanced Micro Devices, allegedly leaked confidential information about his company in the biggest hedge-fund insider trading case in history has left many Silicon Valley colleagues shocked and mystified at his reported involvement.
"It just doesn't make sense," said Jerry Sanders, AMD's co-founder and the company's CEO before Ruiz assumed that job in 2002. "People make dumb mistakes — talk show hosts having sex with subordinates, at least I understand the sex drive. I don't understand this. You just don't talk about things that aren't public. You don't talk to people about insider information, whether you benefit from it or not."
Dozens of Journalist fantasizing, expressing shock and unbelief about their own fantasies. Interviewing every clueless man and dog in the industry about what their own personal fantasies are and then further fantasizing about what the consequences of these fantasies would be....
Post subject: Re: WSJ: AMD leaker linked to Galleon scandal is Hector Ruiz
Posted: Fri Oct 30, 2009 5:20 am
Joined: Tue Jul 24, 2007 4:01 pm Posts: 215 Location: Perth, Western Australia
A few lessons to be learnt from reading the transcripts:
1. If you're doing something wrong, don't keep talking on the phone about using "secure lines" and being paranoid. You might cause the investigators to piss themselves laughing. Plus, there's nothing that confirms intent like discussions about what steps to take to keep the actions secret and what repercussions there could be if you got caught.
2. Even using "insider information" it's actually quite hard to make a profit. Partly it was because:
a) Some of the information was flat out wrong (e.g. Rajarantam boasting about having better connections inside AMD than Chiesi's "AMD Executive" in 28 aa, and then proceeded to give quarterly revenue figures that were 25% too low for processors and 20% too low for graphics (although if the figures were meant to refer to AMD's continuing operations then they would be close); they were also wrong about the makeup of the deal and had to keep revising their expectations on when the news would become public);
b) It turns out not to be much easier to work out what the share price will do even if you know something in advance (they repeatedly try to work out what the movement will be and try to imagine whether they would want to buy the stock if they didn't have that information); and
c) Much bigger things were afoot (the global financial crisis). In fact, based on the "inside information", in August and September Chiesi purchased a total of 327,000 shares for a combined total of $1,660,212. If she had sold them all at AMD's opening price the first trading session after the announcement, she would have pocketed $63,078 profit. However, she didn't sell them immediately, and AMD's price quickly declined after that -- when she eventually started selling them on the 20th of October the price had dropped so much that she would have lost about $270,000 trying to take advantage of that "inside information". Oops.
3. People are willing to put their well-paid careers on the line -- in fact, even their freedom -- over surprisingly small sums of money. Chiesi was hoping the stock wouldn't rise by 30% or more (28 u) so her ambition was to earn $500,000 or less.
Regarding "the AMD Executive" -- his disclosures seem inappropriate on the face of it. The best I can say is that he may have thought it was legitimate for her to know about the deal due to Moffat involving her in the talks somehow, but she claims to have spoken to him about it well before he apparently went to IBM (phone call June 6 (28 b) vs IBM meeting August 18 (28 e)). 28 r, v, and x have actual quotes (rather than hearsay) and he clearly feels comfortable acknowledging the existence of the deal, though most of what he actually says is quite vague except confirming that AMD will be left with less than $3 billion in debt and that the announcement would be in September -- both of which turned out to be false.
It's worth keeping in mind that he wasn't named and wasn't charged by the investigators in full possession of the facts, but that doesn't always mean someone didn't do something wrong -- they may have just felt the infringement was too minor (his actions are certainly on a different level to the others' conspiracy to profit from the information) or the evidence too circumstantial.
If I had to guess at his motives, I imagine he could have made a business decision to leak a little positive news to a select audience to prop up a falling stock price. That would be consistent with both his comments and what Chiesi claims he said.
Post subject: Re: WSJ: AMD leaker linked to Galleon scandal is Hector Ruiz
Posted: Fri Oct 30, 2009 12:06 pm
Joined: Tue Aug 18, 2009 5:57 pm Posts: 25
Hector did mostly shit when he was at the helm of AMD. Cannot begin to tell you how sad I was to see the flamboyant Jerry go. I doubt he would have sold the fabs like Hector did. I was relieved when I heard Dirk was replacing him, but the damage has been done.
commentary Hector Ruiz was quick to display righteous indignation about Intel's alleged unscrupulous business practices. Now--in one of life's delicious ironies--he's a central figure in the biggest scandal to hit Silicon Valley in years.
In a letter from Ruiz that still sits on AMD's Web site and is still signed above the title "Executive Chairman and Chairman of the Board Advanced Micro Devices," he rails against Intel for "breaking the law." And on another Web page bearing his photograph, there are more accusations leveled at Intel for its alleged "illegal" behavior.
In the coming months, Ruiz may face the same kind of scrutiny for illegal behavior that he campaigned against so zealously during his six-year reign as the CEO and chairman of AMD.
[..]
Based on the U.S. Attorney's allegations, Ruiz exhibited a pattern of illegal behavior that would rightfully invite scrutiny on any CEO. As the deal to spin off AMD's manufacturing operations got closer, Ruiz allegedly talked freely with Danielle Chiesi, who worked for the New Castle hedge fund, about details of the deal, which at that time were confidential, insider information items. And Rajaratnam and Chiesi allegedly made large investments in AMD based on this information.
[..]
And what's the greatest irony of all? As the U.S. government reportedly readies an antitrust case against Intel, the government may also be forced to examine the unscrupulous behavior of one the principals who pushed the government to move against Intel. That's some pretty heavy irony.
Even if Ruiz avoids criminal and civil action in the months and years ahead he has scored a serious public relations own-goal for AMD and Globalfoundries.
Post subject: Re: WSJ: AMD leaker linked to Galleon scandal is Hector Ruiz
Posted: Sat Oct 31, 2009 12:00 pm
Joined: Mon Mar 10, 2008 10:42 pm Posts: 30
no@spam.com wrote:
> For some reason the U.S. attorney seems to disagree -- else Mr. Ruiz wouldn't be a free man right now.
Or they are working on a deal with him to turn witness and give testimony...Micron was just as complicit in the Dram price fixing cartel conspiracy as the others but Micron turned witness for the DOJ and in exchange got off free (no fines, no jail-time unlike the unlucky samsung execs)...didn't mean they weren't guilty though...
Time will have to play out on this one before we can conclude Hector is an innocently involved idiot versus an equal player who got his hand caught in the cookie jar.
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