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.
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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