Report: AMD's Hector Ruiz Was Moffat, Chiesi Tipster

The Wall Street Journal

"The AMD executive is Hector Ruiz, then AMD's chairman and previously the company's chief executive," report the Journal's Robert Guth and Don Clark, citing an unnamed "person familiar with the matter." Ruiz has not been charged in a case involving defendants from technology giants IBM and Intel.

A spokesman for Sunnyvale, Calif.-based AMD said the company was "thoroughly reviewing the situation."

"At this time we don't have any more detail to discuss publicly. We are not aware of any allegation of criminal misconduct on the part of any current or former AMD employees, nor have any current or former AMD employees been charged with a crime. It would be inappropriate to comment further on an ongoing Department of Justice investigation," wrote AMD's Michael Silverman in an e-mail reply to inquiries.

An "AMD Executive" is cited in a criminal complaint filed on Oct. 16 in the Southern District of New York as a source of confidential information about AMD to defendants Robert Moffat, a senior vice president at Armonk, N.Y.-based IBM, Danielle Chiesi, portfolio manager at $1 billion hedge-fund firm New Castle Partners, and Mark Kurland, a senior managing director and general partner at New Castle, a former equity hedge-fund group of Bear Stearns Asset Management.

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Specifically, the "AMD Executive" is alleged by prosecutors to have informed Moffat and Chiesi about the timing and scope of AMD's 2008 spin-off of its manufacturing assets to the Abu Dhabi-based Mubadala Development Company. Chiesi, Kurland and Raj Rajaratnam -- the billionaire founder of the Galleon Group hedge fund who is named as a defendant in a second, separate criminal complaint -- are alleged to have used that inside information to trade AMD stock.

Federal agents had monitored electronic communications and conducted wiretaps on the telephones of several of the defendants named in the two criminal complaints as far back as 2006, according to authorities. The complaints and a separate filing by the Securities and Exchange Commission detail a series of communications between the defendants and other, unnamed individuals that involve confidential information about such technology sector mega-deals as AMD's manufacturing spin-off, Intel's 2008 investment in Clearwire and IBM's potential acquisition of Sun in 2009, as well as tips on pending quarterly earnings reports from Intel, Google, Polycom, Akamai Technologies and other companies.

In the complaint against Moffat, Chiesi and Kurland, the "AMD Executive" is referenced in conversations between Moffat and Chiesi, whose phone was tapped. That unnamed individual was also caught on tape himself or herself on a few occasions. For example, during an August 2008 phone conversation with Chiesi in which the "AMD Executive" is reported to have said, "You know, we're going to shock the hell out of everybody," with the manufacturing spin-off, which would occur in October.

AMD announced the spin-off of its manufacturing assets and the formation of Globalfoundries with Mubadala on Oct. 7, 2008. Ruiz, who had resigned as CEO of AMD on July 18, 2008, was named chairman of the new Globalfoundries manufacturing entity, a position he still holds.

Globalfoundries and Mubadala both declined to comment on general inquiries about the case.

Galleon's Rajaratnam also allegedly received inside information about the AMD spin-off from McKinsey & Co. director Anil Kumar, another defendant. Rajiv Goel, a managing director for investments in Santa Clara, Calif.-based Intel's Treasurer's office, is the sixth defendant in the case.

The Wall Street Journal published a graphic last week indicating that the "AMD Executive" who allegedly supplied Chiesi and Moffat with information was also a source for Kumar. But Tuesday's Journal report does not seem to repeat that claim. A reading of the criminal complaint against Kumar does not clearly point to his alleged inside source or sources at AMD being the same as the alleged Chiesi-Moffat source.

Ruiz succeeded AMD founder Jerry Sanders as CEO in 2002, guiding the chip maker to some of its best financial performances, most successful product cycles and market-share capture from archrival Intel. But his last few years at the helm were hampered by poor financial showings following several write-downs associated with AMD's 2006 acquisition of graphics chip maker ATI Technologies.