Thaindian News

NEW YORK CITY (BNO NEWS) – A former IBM senior executive pleaded guilty to revealing company private information, prosecutors said Monday.

Robert Moffat, Jr., 53, resides in Ridgefield, Connecticut, and is a former senior executive at International Business Machines Corp. (IBM), who engaged in an insider trading scheme in which he obtained material, nonpublic information, or inside information, relating to IBM, Advanced Micro Devices, Inc. (AMD) and Lenovo Group Ltd. (Lenovo). He provided it to Danielle Chiesi in order for her to illegally execute securities transactions.

Moffat informed Chiesi of IBM’s and Lenovo’s performance in the companies’ respective fiscal quarters ending in September 2008, and other information relating to a business deal pursuant to which AMD would spin off its manufacturing business into a separate entity.

A court-authorized wiretap allowed the Government to intercept a call on August 22, 2008, in which Moffat provided Chiesi with the timing of the deal’s announcement, telling her there was “zero” chance that it would not happen. In another phone call about a month later, Moffat advised Chiesi that AMD was going to “try to announce (the deal) by 10/10,” referring to October 10, 2008.

The deal was later announced on October 7, 2008, and Chiesi traded in the securities of IBM and AMD in accounts affiliated with New Castle.

At that time, Moffat was a Senior Vice President and Group Executive in IBM’s Systems and Technology Group, and also served as a non-voting member of Lenovo’s Board of Directors. Chiesi, a friend of Moffat, worked at that time for New Castle Partners, an equity hedge fund group affiliated with JPMorgan Chase & Co.

Moffat pleaded guilty on Monday to a two-count information charging him with conspiracy and securities fraud stemming from his involvement in the largest hedge fund insider trading case in history.

Moffat faces a five-year prison sentence for conspiracy, along with a maximum fine of $250,000 or twice the gross gain or loss from the offense. For the securities fraud count, he faces a maximum sentence of 20 years in prison and a fine of $5 million. Forfeiture of Moffat’s property derived from earnings traceable to the offence is also being seeked.

“While a senior executive at a Fortune 500 company, Robert Moffat willfully ignored his professional and legal responsibilities by secretly feeding inside information to his friend. Moffat’s guilty plea marks the 11th conviction in this ongoing insider trading investigation. Together with our partners at the FBI and the SEC, we will continue to protect the integrity of our markets by prosecuting illegal tipping by corporate professionals,” U.S. Attorney Preet Bharara said.