Former AMD chief exec linked to insider trading scandal

 

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Posted on 28 Oct 2009 at 09:54

AMD's former chief executive, Hector Ruiz, has been linked to the insider trading scandal enveloping AMD.

The Manhattan US Attorney's office is investigating allegations that an AMD executive illegally shared information with an investor at Galleon Group hedge fund concerning the company's plans to spinoff its manufacturing arm into Globalfoundries.

The executive remained unnamed in the court documents filed by the Attorney's office, but a report in the Wall Street Journal has now identified this executive as Hector Ruiz.

AMD says it is unaware of any allegations of criminal misconduct regarding its current or former employees, while Globalfoundries claims it has not been contacted by any government agency in relation to the case.

Well, I guess the good news is that he has been in a diminished role from what he was. But the bad news is, that it's not a zero role

"Well, I guess the good news is that he has been in a diminished role from what he was," says JMP Securities analyst Alex Gauna. But the bad news is, that it's not a zero role.

"It's going to add distractions to a company that's got quite a lot on its plate, trying to execute a very complex model with new partners, new structure, very strange financials, and now this sort of over-hang," he adds. "Management's time is going to be taken up with attorneys."

If the allegations prove to be true, prosecutors will try to discover the scale of the leaks at AMD, possibly bringing action against the company, claims Michael Perlis, a former assistant director of enforcement for the Securities Exchange Commission.

"If AMD had sufficient policies and procedures in place and took remedial steps in regard to their officer, I think it unlikely the SEC would take action," says Perlis. "If the SEC finds that this was not an isolated incident, then it's possible."

Author: Stuart Turton and Reuters