Former IBM executive Robert Moffat, who played a main role in the sale of IBM’s RTP-based PC Division to Lenovo Ltd. in 2006, plead guilty today to conspiracy and securities fraud charges in connection with an insider-trading ring.
Moffat owned up to providing insider information about IBM, Lenovo and AMD to Danielle Chiesi, who had been associated with a previous Bear Stearns hedge fund called New Castle Funds LLC. Moffat said he knew what he was doing was wrong and that it would help Danielle Chiesi, a personal friend, in her job, but that he gave her tips about weak earnings at Lenovo; poor server sales at IBM; and a pending restructuring at AMD nonetheless.
With his plea agreement, Moffat faces up to six months in prison. A 20 to 25 years sentence for the securities fraud charges is possible.
Moffat is the 11th individual of an insider-trading ring related to the Galleon Group to plead guilty. In a probe of the insider-trader ring, prosecutors said the ring had racked up more than $20 million in profits. Moffat’s lawyer said that he is not cooperating with the U.S. Attorney’s probe and that his client did not benefit monetarily from the insider information.
Moffat was at one time, the head of the Research Triangle Park-based PC Division of IBM, and was deeply involved in that division’s sale to China-based Lenovo Ltd. in 2006. He also played a principal role in the transaction of the unit, which ultimately led to Lenovo Ltd. establishing a world headquarters in Morrisville.
Before he was arrested this past October, Moffat was a senior vice president at IBM and was viewed as CEO Sam Palmisano’s possible successor.
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