Hector Ruiz, chairman of Advanced Micro Devices spin-off Globalfoundries, will resign from the company in January. The announcement follows the emergence of his name in connection to the Galleon Funds insider trading case.
Ruiz "will take a voluntary leave of absence effective immediately before resigning from the company in January," according to a statement Monday from the Globalfoundries board. Ruiz had submitted his resignation to the board in September with an effective date of January 4, 2010, the statement said.
Hector Ruiz
(Credit: AMD)The resignation comes after an unnamed executive at AMD--which turned out to be Ruiz, according to a report--was cited repeatedly in a complaint filed last month by the U.S. attorney for New York's Southern District.
The case revolves around Raj Rajaratnam, who founded the Galleon Group, a New York-based hedge fund that manages $7 billion. Federal prosecutors have charged Rajaratnam and five others with securities fraud, alleging they were involved in insider trading of well-known tech companies, including Intel, Google, AMD, and IBM.
All have said they are innocent, according to The Wall Street Journal.
The U.S. Attorney's complaint alleges Rajaratnam and others engaged in insider-trading activity when AMD was trying to reorganize and spin off its manufacturing operations--which eventually became Globalfoundries, which is a joint venture with the Abu Dhabi government.
Ruiz, who is also former CEO and chairman of AMD, has not been charged with a crime, according to The New York Times.
He will be replaced at Globalfoundries by Alan E. "Lanny" Ross, who will serve as interim chairman, effective immediately, until a permanent chairman has been appointed by the board, according to Globalfoundries. Ross, a current member of the Globalfoundries board, was previously president and CEO of communications chip supplier Broadcom.
Ruiz joined AMD in January 2000 as president and chief operating officer, and was named chief executive officer in April 2002. He was appointed chairman of the board in April 2004, and was named executive chairman in June 2008.
Ruiz was appointed chairman of Globalfoundries when it was formed in October of last year.
He spent 22 years at Motorola, and in his last post there, served as president of the firm's Semiconductor Products Sector. Ruiz also worked at Texas Instruments in the company's research laboratories and manufacturing operations.
A high-ranking IBM executive charged with insider trading connected to the Galleon Group has left the company.
Robert Moffat, a senior vice president who was once thought to be a possible future IBM chief executive candidate, had been placed on leave following charges brought by the U.S. Attorney earlier this month against him and five others.
The case revolves around Raj Rajaratnam, who founded the Galleon Group, a New York-based hedge fund that manages $7 billion in funds. Federal prosecutors charged Rajaratnamm and five others, including Moffat, with securities fraud, alleging they were involved in insider trading of well-known tech companies, including Intel, Google, AMD, and IBM.
The government alleged that Moffat discussed future IBM and Sun Microsystems earnings announcements and the reorganization of Advanced Micro Devices with Danielle Chiesi, an employee of New Castle, a hedge fund.
Moffat "is no longer an employee of IBM," according to a statement by IBM on its internal communications network.
Rod Adkins, who was named acting head of IBM's Systems and Technology Group on October 19, has been appointed senior vice president, STG, according to IBM. Adkins, 51 years old, joined IBM in 1981, and has held a variety of product development, business operations, and general management positions.
Adkins served as general manager of desktop systems at the former IBM PC company. He also was general manager for Unix systems in the Systems and Technology Group.
Kerry Lawrence, Moffat's lawyer has said Moffat was "shocked" by the charges. Alan Kaufman, Chiesi's attorney, said his client would plead innocent to the charges.
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.
The 'truth' about Intel that Ruiz campaigned to expose. Ironically, the truth about the former AMD CEO is now at the center of a Silicon Valley scandal.
(Credit: AMD)And one of the operative phrases in that letter, "pattern of abuse," may turn out to be little more than facile argument that can easily be turned back on Ruiz himself, if it is established that he abused the trust placed in him by stockholders.
In short, if Ruiz was connected--however indirectly--to Raj Rajaratnam and the Galleon Group, then his--and his former company's--constant haranguing of Intel and the never-ending appeals to governments to go after Intel, lose some of their punch. Especially if it is little more than a stratagem to gain market share.
Based on the U.S. Attorney's allegations, Ruiz exhibited a pattern of 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.
Ruiz was the man driving the spin-off of AMD's manufacturing operations. In earnings conference calls, while he was still chairman of AMD, he was the go-to man for information about AMD's efforts to streamline its manufacturing operations--which AMD at one time called "asset lite"--and ultimately the person spearheading the deal with Advanced Technology Investment and Abu Dhabi-based Mubadala Development, who invested billions in the spin-off.
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.
The former CEO and chairman of Advanced Micro Devices, Hector Ruiz, has been linked to the Galleon insider-trading case, according to a report in the Wall Street Journal on Tuesday.
Hector Ruiz
(Credit: AMD)This revelation comes after an unnamed executive at AMD was cited repeatedly in a complaint filed by the U.S. Attorney for New York's Southern District earlier this month.
The case revolves around Raj Rajaratnam, who founded the Galleon Group, a New York-based hedge fund that manages $7 billion in funds. Federal prosecutors charged Rajaratnam and five others with securities fraud, alleging they were involved in insider trading of well-known tech companies, including Intel, Google, AMD, and IBM.
"We are thoroughly reviewing the situation," AMD spokesperson Drew Prairie said. "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."
Ruiz is currently chairman of Globalfoundries, the chip manufacturing concern that was spun off from AMD in October of last year. A Globalfoundries spokesman had no comment.
AMD was prominent in the U.S. Attorney's complaint, which alleges Rajaratnam and others engaged in insider-trading activity when AMD was trying to reorganize and spin off its manufacturing operations last year--which eventually became a multibillion-dollar deal. The U.S. Attorney's complaint makes the first references to an AMD executive in June 2008. At that time, AMD, seeking a buyer for its manufacturing operations, entered into negotiations with investors based in Abu Dhabi.
As the announcement of the spin-off got closer, Danielle Chiesi, who worked for the New Castle hedge fund, is alleged to have said that "she had spoken with the AMD Executive, who told her that 'Wall Street will be shocked,' and that AMD will 'definitely make the announcement...before they print (quarterly earnings).'" Alan Kaufman, Chiesi's attorney, said his client would plead innocent to the charges.
The spin-off was ultimately announced on October 6 when an investment was secured from Advanced Technology Investment and Abu Dhabi-based Mubadala Development. At that time, AMD said the new company had secured about $5.7 billion of "confirmed, pledged investment."
Ruiz served as CEO and chairman of AMD until July 2008, when Dirk Meyer was appointed CEO. He remained as chairman of AMD until October when AMD's manufacturing operations were spun off. At that time, he become chairman of Globalfoundries.
Updated on October 23 at 3:00 p.m. PDT: with additional information identifying the person who is talking to the "AMD executive" and additional statements.
An unnamed executive at Advanced Micro Devices is cited repeatedly in the Galleon Funds insider-trading case, presenting a potentially awkward situation for the chipmaker as the case goes forward.
It's not clear if the AMD executive cited in the U.S. Attorney's complaint would be charged or even implicated by name, but government charges of insider trading have rattled Silicon Valley. Rajiv Goel, a managing director of strategic investments for Intel's treasury group, was arrested and charged in the case and put on leave, forcing Intel CEO Paul Otellini to publicly address the case.
And a high-level executive at IBM, senior vice president Robert Moffat, was placed on leave Monday after he was charged. Moffat is accused of supplying details about IBM and Sun Microsystems earnings to Danielle Chiesi, who worked for the New Castle hedge fund.
"If it's the top two (executives at AMD), that would be significant. But it could be anyone. Mid-level executives. We don't know," said David Wu, an analyst at GC Research.
"We are currently reviewing the situation and we have no further comment," AMD spokesman Michael Silverman said.
The case revolves around Raj Rajaratnam, who founded the Galleon Group, a New York-based hedge fund that manages $7 billion in funds. Federal prosecutors charged Rajaratnam and five others on Friday with securities fraud, alleging they were involved in insider trading of well-known tech companies, including Intel, Google, AMD, and IBM.
In the wake of the allegations, the Galleon Group said it will close, though the firm is exploring alternatives for its business that could allow parts of the hedge fund to survive, according to the Wall Street Journal.
AMD was prominent in the complaint, filed by the U.S. Attorney ... Read more
Updated on October 21 at 7:25 p.m. PDT: correcting, at bottom, for what the U.S. Attorney's office describes as "CC-1."
Think of it as a twist on the old rivalry between chip giants Intel and Advanced Micro Devices. But this time, the rivalry is about which company can make a hedge fund more money.
The complaint filed by the government against six people on Friday details how a relatively obscure Intel treasury executive and a prominent hedge fund manager allegedly participated in an insider-trading ring centered on an Intel investment. The document also shows alleged insider trading of AMD shares by an adviser from McKinsey & Company before the chipmaker spun off of its manufacturing operations.
The case revolves around Raj Rajaratnam, who founded the Galleon Group, a New York-based hedge fund that manages $7 billion in funds. Federal prosecutors charged Rajaratnam and five others on Friday with securities fraud, alleging they were involved in insider trading of some of the most well-known tech companies including Intel, Google, AMD, and IBM.
Jim Walden, a lawyer for Rajaratnam, said Friday, "My client is innocent and we are going to fight the charges," according to The New York Times.
Rajaratnam, a native of Sri Lanka, got his start as a semiconductor analyst at investment-banking firm Needham & Co. and parlayed this into the Galleon Group, where he had a reputation for particularly aggressive information-gathering tactics.
And one of his contacts was Rajiv Goel, a managing director of strategic investments for Intel's treasury group and one of the six defendants.
Goel is not well known inside--or outside--of Intel. In fact, he is an Intel executive apparently so obscure that CEO Paul Otellini said in a television interview Monday that he'd never even heard of him--yet somebody who has dragged the chipmaker into the biggest insider-trading scandal to hit Silicon Valley in years. When asked about the case in an interview with Fox Business News Monday, Otellini said his first reaction was, "'Who's Rajiv Goel'--I'd never heard of this guy," the CEO said, according to a Fox transcript. "He's a fairly low-level guy." Otellini added: "People are people. I don't want to judge him. He hasn't been arrested. I think he's only been charged. If this is true, he's out."
Goel was, in fact, arrested on Friday in San Jose, Calif. ... Read more
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