The trio from Intel, IBM, and
AMD's advising firm reportedly used their insider insight to help a
high profile investor gain more than $25M
USD in ill-begotten profits between 2006 and 2009, trading
Advanced Micro Devices, Akamai, Clearwire, Google, Hilton, Polycom,
and Sun Microsystems, among others. Some of the defendants
apparently broke the law for kickbacks, others, such as Mr. Moffat,
out of friendship.
The feds reportedly caught the
defendants in their carefully crafted and timed insider trades,
thanks to wiretaps of their phone conversation. And insider
informant also reportedly played a pivotal role. The
investigation culminated in the arrest of the six primary players
According to the feds, on January 8, 2007,
billionaire investor and founder of the Galleon Group Raj Rajaratnam
contacted Intel's Goel seeking inside information. Mr. Goel was
more than happy to oblige, indicating that share prices would likely
be rising over the next couple days. The next day Mr.
Rajaratnam followed the inside tip and bought 1 million shares of
Intel stock. On January 11 he loaded up with 500,000 more
Then on January 16, Mr. Rajaratnam sold all of his
Intel stock, pocketing a $1M USD profit. Later that day Intel
earnings were reported and failed to excite, plunging the share
prices 5 percent. However, Mr. Rajaratnam and his Intel contact
had beat the system -- or so they thought.
Mr. Goel wasn't
finished, though. He also allegedly tipped Mr. Rajaratnam off
about an impending deal between Clearwire and Sprint. An early
purchase was enough to score another $750,000 in profits. Mr.
Rajaratnam returned the illegal love, executing insider trades for
Mr. Goel on Hilton and PeopleSupport stock which handed the Intel
executive $250,000 in profits.
The story was similar for
Robert Moffat, an IBM golden boy. The well-liked executive was
close friends with Danielle Chiesi, an executive of the hedge fund
New Castle Partners. During a courtship
of Sun, IBM got access to Sun's upcoming tax information.
And Mr. Moffat leaked this information to Ms. Chiesi. She pocketed
$1M USD when shares later soared upon the official release of Sun's
good financial news.
AMD's stock was another tied into the
illegal trades. Galleon reportedly made $9.5M USD off its stock
after receiving inside tips from Anil Kumar, who had knowledge of how
the company would be offloading much of its semiconductor
manufacturing capabilities in
mid 2008. In the end, though, justice was at least served
on these gains, somewhat, by the market -- they were almost entirely
wiped out when the recession hit in full.
director of the SEC’s enforcement division concludes,
"What we have uncovered in the trading activities of Raj
Rajaratnam is that the secret of his success is not genius trading
strategies. He is not the astute study of company fundamentals or
marketplace trends that he is widely thought to be. He cultivated a
network of high-ranking corporate executives and insiders, and then
tapped into this ring to obtain confidential details about quarterly
earnings and takeover activity."
The investigation of
these illegal dealings is far from over. Meanwhile, the accused
vow to fight the government's charges in U.S. District Court for the
Southern District of New York. In the meantime Mr. Goel has
been placed on leave from Intel, pending the investigation. IBM
declined comment about its star executive or what actions it might
quote: In a move that could rock the electronics industry, "classic IBM executive" Robert Moffat, IBM's highest ranking hardware executive and likely CEO-successor has been indicted on charges of insider trading that may land him a prison sentence.
quote: If this is true then Moffat is among the biggest fools on the planet. A little bit of greed is all it takes to ruin your career for life, and at 53 he's not a young man. Career-wise he may never recover.
quote: Raj Rajaratnam could have dual Sri Lankan citizenship. Because he is a billionaire, he could easily flee the USA the same way Roman Polanski did in 1978:
quote: isn't this better for all of us?
quote: isn't this better for all of us?
quote: it might destroy the stock market, but
quote: [The Fed doesn't] act in someone’s private interest
quote: The problem with fiat currency is it's dilution through printing money and monetizing debt.
quote: The unrepresented "tax" of inflation is the result,...
quote: ...and so is a government that continues to grow and expand while making the average citizen poorer.
quote: If the currency was tied to a commodity like gold for example, the ability to expand government in bad economic times would be impossible, and the citizens wouldn't loose the value of their savings though inflation,
quote: not to mention government waste.
quote: How about the revolving door between the Treasury
quote: Fannie Mae, the Fed banks and Wall Street firms.
quote: which currently has 303 co-sponsors in the house, are these people conspiracy theorists too?
quote: Ever since the fed has been in existence there has been a never ending cycle of booms and busts
quote: Interest rates have been all over the place and are currently artificially low by a wide margin.
quote: Maybe it's time to shed some light on the fed and return to a sound currency.
quote: Their government is run by the communist party,... their government is highly oppressive and yet they are more capitalistic then Europe?
quote: most of the largest Chinese companies are state owned,
quote: director of the SEC’s enforcement division concludes, " What we have uncovered in the trading activities of Raj Rajaratnam is that the secret of his success is not genius trading strategies . He is not the astute study of company fundamentals or marketplace trends that he is widely thought to be. He cultivated a network of high-ranking corporate executives and insiders, and then tapped into this ring to obtain confidential details about quarterly earnings and takeover activity."
quote: Rajaratnam, Kumar and Goel all from India & or connected directly/indirectly with this bussiness school.