Welcome!

Linux Containers Authors: Zakia Bouachraoui, Elizabeth White, Yeshim Deniz, Liz McMillan, Pat Romanski

Related Topics: Open Source Cloud, Microsoft Cloud, Machine Learning , Agile Computing

Open Source Cloud: Article

IBM Hardware Chief, Intel VC Exec Arrested in Insider Trading Scam

US Attorney Preet Bharara said it was the first time court-authorized wiretaps were used to uncover insider trading

IBM senior VP Robert Moffat (pictured), the head of IBM's Systems and Technology Group - in other words the guy who runs all of its hardware as well its microelectronics unit - and Intel Capital's director of strategic investment Rajiv Goel, one of its VC people, were arrested Friday morning on insider trading charges.

They were alleged tipsters.

The $20 million scam, involving AMD, Intel, IBM, Akamai, Clearwire and Google stock as well as Polycom's and Hilton Hotels', is said to be the biggest ever pulled off by a hedge fund and had the US Attorney, the FBI and the SEC doing a televised press conference on CNBC this afternoon.

US Attorney Preet Bharara said it was the first time court-authorized wiretaps were used to uncover insider trading.

Authorities also arrested billionaire hedge operator Raj Rajaratnam, the founder of the big $3 billion Galleon Group and manager of the Galleon Technology Funds, identified as the scam's kingpin and described as the richest Sri Lankan in the world, as well as McKinsey director Anil Kumar, and Danielle Chiesi and Mark Kurland of New Castle Partners, the old defunct Bear Stearns Asset Management equity hedge fund group. Kurland is president of New Castle.

Rajaratnam's phones were bugged so the FBI has him on tape. There is also testimony from an unidentified cooperating witness, who recorded some of the conservations and has agreed to plead guilty.

Rajaratnam, who acted on the insider information and was arrested on television hours before he was due to skip the country, was charged with four counts of conspiracy and nine counts of securities fraud. He's looking at a lot of jail time.

Rajaratnam reportedly suspected his conversations had been captured on tape and had booked a flight to Switzerland by way of London for Friday evening.

Moffat allegedly passed information on AMD's arrangements with Abu Dhabi to Chiesi, Rajaratnam's go-between, ahead of AMD spinning off its plants into a joint venture called GlobalFoundry. Rajaratnam was trying to time the market and ironically got burned. He bought 4.9 million shares of AMD way too late to make a killing.

When it still looked liked they would clean up, Chiesi knew she would turn into a "Martha [expletive] Stewart" if found out.

Moffat was party to the AMD deal in his capacity as head of IBM Microelectronics because IBM would be licensing the spun-off entity its technology. They were depending on him for the deal's timing and details.

Moffat also allegedly passed on insider information on IBM and Sun to Chiesi, who told Kurland, and New Castle traded on it, making $500,000 on IBM and $900,000 on Sun.

According to the bugged phone calls, Rajaratnam had notions of moving Moffat to "some company where we can trade well" to which Chiesi replied "I know. I know. I'm thinking of that too. Or just keep him at IBM, you know, because this guy is giving me more information...I'd like to keep him at IBM right now because that's a very powerful place for him. For us too." To which Rajaratnam replies, "Only if he become CEO." Then Chiesi says, "Well, not really. I mean, come one...you know, we nailed it."

Goel, who furnished information obtained on the job about Clearwire and other stocks, had a personal account at Charles Schwab managed by Rajaratnam.

Neither Intel nor IBM has returned calls.

More Stories By Maureen O'Gara

Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at)sys-con.com or paperboy(at)g2news.com, and by phone at 516 759-7025. Twitter: @MaureenOGara

Comments (0)

Share your thoughts on this story.

Add your comment
You must be signed in to add a comment. Sign-in | Register

In accordance with our Comment Policy, we encourage comments that are on topic, relevant and to-the-point. We will remove comments that include profanity, personal attacks, racial slurs, threats of violence, or other inappropriate material that violates our Terms and Conditions, and will block users who make repeated violations. We ask all readers to expect diversity of opinion and to treat one another with dignity and respect.


IoT & Smart Cities Stories
In his general session at 19th Cloud Expo, Manish Dixit, VP of Product and Engineering at Dice, discussed how Dice leverages data insights and tools to help both tech professionals and recruiters better understand how skills relate to each other and which skills are in high demand using interactive visualizations and salary indicator tools to maximize earning potential. Manish Dixit is VP of Product and Engineering at Dice. As the leader of the Product, Engineering and Data Sciences team at D...
Dynatrace is an application performance management software company with products for the information technology departments and digital business owners of medium and large businesses. Building the Future of Monitoring with Artificial Intelligence. Today we can collect lots and lots of performance data. We build beautiful dashboards and even have fancy query languages to access and transform the data. Still performance data is a secret language only a couple of people understand. The more busine...
Nicolas Fierro is CEO of MIMIR Blockchain Solutions. He is a programmer, technologist, and operations dev who has worked with Ethereum and blockchain since 2014. His knowledge in blockchain dates to when he performed dev ops services to the Ethereum Foundation as one the privileged few developers to work with the original core team in Switzerland.
René Bostic is the Technical VP of the IBM Cloud Unit in North America. Enjoying her career with IBM during the modern millennial technological era, she is an expert in cloud computing, DevOps and emerging cloud technologies such as Blockchain. Her strengths and core competencies include a proven record of accomplishments in consensus building at all levels to assess, plan, and implement enterprise and cloud computing solutions. René is a member of the Society of Women Engineers (SWE) and a m...
Andrew Keys is Co-Founder of ConsenSys Enterprise. He comes to ConsenSys Enterprise with capital markets, technology and entrepreneurial experience. Previously, he worked for UBS investment bank in equities analysis. Later, he was responsible for the creation and distribution of life settlement products to hedge funds and investment banks. After, he co-founded a revenue cycle management company where he learned about Bitcoin and eventually Ethereal. Andrew's role at ConsenSys Enterprise is a mul...
Whenever a new technology hits the high points of hype, everyone starts talking about it like it will solve all their business problems. Blockchain is one of those technologies. According to Gartner's latest report on the hype cycle of emerging technologies, blockchain has just passed the peak of their hype cycle curve. If you read the news articles about it, one would think it has taken over the technology world. No disruptive technology is without its challenges and potential impediments t...
If a machine can invent, does this mean the end of the patent system as we know it? The patent system, both in the US and Europe, allows companies to protect their inventions and helps foster innovation. However, Artificial Intelligence (AI) could be set to disrupt the patent system as we know it. This talk will examine how AI may change the patent landscape in the years to come. Furthermore, ways in which companies can best protect their AI related inventions will be examined from both a US and...
Bill Schmarzo, Tech Chair of "Big Data | Analytics" of upcoming CloudEXPO | DXWorldEXPO New York (November 12-13, 2018, New York City) today announced the outline and schedule of the track. "The track has been designed in experience/degree order," said Schmarzo. "So, that folks who attend the entire track can leave the conference with some of the skills necessary to get their work done when they get back to their offices. It actually ties back to some work that I'm doing at the University of San...
When talking IoT we often focus on the devices, the sensors, the hardware itself. The new smart appliances, the new smart or self-driving cars (which are amalgamations of many ‘things'). When we are looking at the world of IoT, we should take a step back, look at the big picture. What value are these devices providing. IoT is not about the devices, its about the data consumed and generated. The devices are tools, mechanisms, conduits. This paper discusses the considerations when dealing with the...
Bill Schmarzo, author of "Big Data: Understanding How Data Powers Big Business" and "Big Data MBA: Driving Business Strategies with Data Science," is responsible for setting the strategy and defining the Big Data service offerings and capabilities for EMC Global Services Big Data Practice. As the CTO for the Big Data Practice, he is responsible for working with organizations to help them identify where and how to start their big data journeys. He's written several white papers, is an avid blogge...