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Ex-IBMer Moffat pleads guilty in insider-trading case
- — 30 March, 2010 02:50
IBM's former server chief, Robert Moffat, on Monday pleaded guilty to charges of conspiracy to commit securities fraud in a case connected to an insider-trading scandal.
Sentencing in the case has been scheduled for July 26. The conspiracy charge carries a potential penalty of five years in prison, while the insider-trading charge has a maximum of 25 years.
Moffat is the latest technology executive to plead guilty in a case involving illegal trades that generated millions of dollars in illicit profits. Ten others have already pleaded guilty in connection with the case, including Rajiv Goel, formerly Intel treasury's managing director of investments.
Moffat entered a guilty plea in the U.S. District Court for the Southern District of New York. Moffat was arrested and charged in October along with Goel and three Wall Street traders including Raj Rajaratnam, founder of Galleon Group and Danielle Chiesi, a portfolio manager at New York-based New Castle Funds.
Chiesi and Rajaratnam allegedly tapped into a network of high-ranking corporate executives and insiders, including Moffat, to obtain confidential details about quarterly earnings and takeover activity of companies like Intel, Google, Sun Microsystems, Akamai Technologies, Sprint Nextel and Advanced Micro Devices, according to a court document filed by the U.S. Securities and Exchange Commission in October. In the wake of the SEC investigation, the DOJ has taken over prosecution of the case.
Moffat last week waived his right for grand-jury indictment, and the DOJ filed a notice of intent to bring criminal charges in the case. Ten others involved in the case have already pleaded guilty for their involvement in the alleged scam.
Moffat, formerly senior vice president of IBM's Systems and Technology Group, allegedly leaked insider information about IBM considering acquiring Sun to Chiesi. Chiesi allegedly made trades on behalf of New Castle Funds based on the tips and generated about US$1 million in illegal profits.
Chiesi worked along with Rajaratnam, who raked in close to $25 million in illegal profits, according to prosecutors.
Moffat was placed on a leave of absence shortly after he was arrested in October. His leave became permanent soon after, and it wasn't clear if he resigned or was fired by IBM.