The Moffat Insider Trading Scandal: A Timeline

Inside The Rise And Fall Of Robert Moffat Jr.

Former IBM executive Robert Moffat Jr. pleaded guilty to insider trading charges Monday in the case of the Galleon Group scandal. Moffat, formerly senior vice president of IBM's Systems and Technology Group, was charged last fall in a case that rocked the IT industry and, in particular, Big Blue and its channel partners.



Here's a look back at the series of events that led to Moffat's rise and fall.

Meet The New Boss: Moffat Succeeds Zeitler As IBM Hardware Chief

On August 1, 2008, longtime IBM executive William "Bill" Zeitler retired as senior vice president of IBM Systems and Technology, handing the reigns to Moffat, who had been pegged as Zeitler's successor several months earlier. Moffat, who had joined Big Blue in 1978, had served as senior vice president of IBM's Personal and Printing Systems Group and, more recently, as senior vice president of IBM's Integrated Operations, where he was credited with improving Big Blue's supply chain and delivery operations. Over the years, Moffat earned a reputation as a hard-nosed, straight-talking executive who cut through red tape and got the job done. As such, he was considered a rising star within IBM and, as a close confidant to IBM Chairman and CEO Sam Palmisano, a possible candidate for chief executive down the road.

The Bombshell: Moffat Arrested And Charged With Insider Trading

On Oct. 16, 2009, shocking news breaks: Moffat is arrested and charged with insider trading in what federal authorities describe as the largest hedge fund insider trading case ever. Moffat turns himself in to the FBI, and five other people are also arrested: Rajiv Goel, a director in strategic investments at Intel; Raj Rajaratnam, managing member of hedge fund Galleon Group; Danielle Chiesi of New Castle Funds; Mark Kurland, an executive at New Castle Funds, and Anil Kumar, a director at McKinsey and Co. The case is also historic as it is reportedly the first time court-approved wiretaps have been used in an insider trading case.



More details quickly emerge about the case. Rajaratnam, the billionaire founder of the Galleon Group, is accused of being the ring leader of the vast insider trading conspiracy that used confidential information for trades involving companies such as Google, AMD, Sun Microsystems, and Polycom, as well as IBM and Intel. According to the criminal complaints against the six co-defendants, Moffat is accused of passing insider information to hedge fund manager Chiesi at New Castle Partners. Specifically, federal authorities claim Moffat gave Cheisi secrets about AMD's proposed spin-off of its manufacturing business as well as IBM's investigation into a possible acquisition of Sun Microsystems. According to the criminal complaints, federal authorities used wiretaps to record the defendants' conversations about non-public information, including conversations between Moffat and Cheisi.

Executive Shuffle: Moffat Placed On Leave From IBM

On Oct 19, 2009, just days after he was arrested and charged with insider trading, Moffat is placed on leave by IBM. Moffat's corporate biography on IBM's Web site is promptly taken down. Meanwhile, Rod Adkins (left), a 28-year veteran of IBM, is named acting head of IBM's Systems and Technology Group. Adkins previously served as senior vice president in charge of development and manufacturing for the Systems and Technology Group, and spent much of his career in various management positions in IBM's desktop and Unix systems businesses.

Loose Lips: AMD's Ruiz Named As Moffat's Source

On Oct. 27, 2009, a report in The Wall Street Journal names current AMD Chairman and former CEO Hector Ruiz (left) as the unnamed "AMD executive" in the criminal complaint who allegedly gave Moffat and Cheisi confidential information about AMD. Ruiz is not charged with any criminal wrongdoing in the Galleon Group insider trading scandal, and AMD officials neither confirm nor deny the report. However, Ruiz's alleged involvement gives new scope to the already high-profile scandal and opens up questions as to how far the Galleon Group conspiracy reached through the IT industry.

The Departed: Moffat Resigns From IBM, Ruiz Steps Down From AMD

Less than two weeks after he was placed on leave from IBM, Moffat formally resigns from the company on Oct. 31, 2009. According to Moffat's attorney, the longtime IBM executive retired from the company and was not fired. As a result, Rod Adkins is named as Moffat's permanent replacement as senior vice president of IBM Systems and Technology Group.



Meanwhile, Ruiz steps down as chairman of AMD and takes a leave of absence from the company following The Wall Street Journal's report implicating him in the Galleon Group insider trading scandal. Ruiz also agrees to resign from his position as a director of GlobalFoundries, the chip manufacturing business that AMD spun off in March of 2009. The GlobalFoundries divestiture was also the center of the AMD-related confidential information in the alleged Galleon Group conspiracy.

The Plot Thickens: Insider Trading Probe Grows

On Nov. 5, 2009, authorities arrest and charge 14 more people with securities fraud and conspiracy in the widening insider trading probe. Among the 14 is Ali Hariri, a vice president at Atheros, a semiconductor company based in Santa Clara, Calif. Hariri is the third IT executive to be charged in the growing insider trading case, including Moffat and Intel's Rajiv Goel.

Not Guilty: Moffat Denies Insider Trading Charges

On Dec. 9, 2009, Moffat denies the insider trading charges against in a court filing in U.S. District Court. While Moffat admits speaking with Cheisi, he denies disclosing any non-public information about IBM, Sun and AMD to Cheisi or anyone else involved in the Galleon Group scandal. In addition, Moffat asks for civil charges in the case brought by the U.S. Securities and Exchange Commission to be dropped. The request is denied.

Dominoes Falling: Ex-Intel Exec Pleads Guilty

Pressure in the Galleon Group insider trading scandal grows as former Intel Capital director Rajiv Goel pleads guilty to fraud on Feb. 8, 2010. As one of the original six accused parties charged in the scandal, Goel admits that he gave inside information to Galleon Group's Raj Rajaratnam (left) and profited from illegal trades that Rajaratnam allegedly made on Goel's behalf. Goel becomes the ninth person in the Galleon Group case to plead guilty, joining Anil Kumar of McKinsey and Co. and Mark Kurland of New Castle Funds. Moffat, along with Rajaratnam and Cheisi, continue to deny the charges.

The Last Straw? Moffat Admits Guilt

On March 29, 2010, after several days of speculation, Moffat pleads guilty to two charges against him: securities fraud and conspiracy to commit securities fraud. In court, Moffat admits he disclosed non-public information to Cheisi but says he did not profit directly from any of the insider trades committed in the case and never received any benefits or payments as a result of his insider tips. The securities fraud charge carries up to 20 years in jail, while the conspiracy charge carries a maximum prison sentence of five years. As part of the plea agreement with authorities, however, Moffat faces between zero and six months in jail, according to the sentencing guidelines, although a judge can disregard the guidelines and give him a longer sentence. Moffat's sentencing is scheduled for July.



Both Cheisi and Rajaratnam, the lone holdouts of the original six defendants in the Galleon Group case, continue to maintain their innocence.