Amd
An unnamed “AMD executive” was cited in a complaint filed against Danielle Chiesi, who is accused of using material nonpublic information to trade stocks. The person identifying Ruiz as the executive asked to remain anonymous because those details of the case arent public. Ruiz stepped down as CEO last year and then became chairman of Globalfoundries Inc. as part of its spinoff by AMD, the worlds second-largest maker of personal-computer processors.
Chiesi, a former Bear Stearns Cos. hedge-fund employee, was charged by federal prosecutors as part of an insider-trading ring tied to Billionaire Raj Rajaratnam, Galleons co-founder. Court documents include transcripts of recorded conversations between Chiesi and the AMD executive, in which they allegedly discussed the timing of the spinoff of AMDs manufacturing operations into a joint venture with the government of Abu Dhabi. That business became Globalfoundries.
The unnamed executive told Chiesi about the transaction in September 2008, ahead of the announcement of the deal, according to court documents. The executive said there was a 99 percent chance that the agreement would be disclosed before earnings were announced — a prediction that came true, prosecutors said. On Oct. 7, 2008, AMD said it would spin off its manufacturing arm as part of an $8.4 billion investment from the Abu Dhabi government. It reported earnings on Oct. 16.
Gonna Shock
“You know, were gonna shock the hell out of everybody,” the AMD executive told Chiesi, according to a transcript of a Sept. 16, 2008, conversation included in court documents.
Ruiz declined to comment, said Jon Carvill, a spokesman for Sunnyvale, California-based Globalfoundries. The company also declined to comment on the matter, which occurred before Globalfoundries was formed, Carvill said. Separate requests for comment left on Ruizs office phone and with his assistant werent returned. He also didnt respond to e-mail.
Ruiz, 63, hasnt been charged with wrongdoing in the case, and prosecutors dont say he profited from insider trading. He is the highest-ranking executive tied to the Galleon case, which is the largest investigation to target hedge funds. Rajaratnam and Chiesi, both based in New York, were arrested Oct. 16 along with four others, including International Business Machines Corp. executive Robert Moffat and Rajiv Goel, who helped direct investments at Intel Corp., AMDs chief rival.
Galleon and New Castle Funds LLC are accused of making $20 million on illegal trades of stocks including Armonk, New York- based IBM, Intel of Santa Clara, California, and Google Inc. in Mountain View, California.
Outside the Norm
AMD declined to comment on the investigation, said Drew Prairie, a spokesman for the company, which is also based in Sunnyvale. “We are continuing to evaluate the matter and we are not aware of any allegation of criminal misconduct on the part of AMD or any current or former employees.”
“This is outside the norm,” said James Balassone, executive in residence at the Markkula Center for Applied Ethics at Santa Clara University in California. “Silicon Valley does have a reputation of maintaining and trying to exploit close relationships. But its been my personal experience that the high-level executives, lawyers and bankers — I have found them to be very tight-lipped.”
AMD fell 27 cents, or 5 percent, to $5.15 yesterday in New York Stock Exchange composite trading. The shares have more than doubled this year.
Chiesis Role
Robert Weisberg, a professor specializing in criminal law and white-collar crime at Stanford Law School, said Ruiz may be cooperating with the investigation or may be deemed not to have violated the law.
Its possible Ruiz shared information with Chiesi under legitimate, confidential circumstances, Weisberg said. In that case, he said, Chiesi may have used the information improperly, leading her to face additional charges of misappropriation, Weisberg said. Chiesi has denied wrongdoing.
Ruiz has spent his career at some of the biggest companies in the semiconductor industry. A Mexican immigrant, he worked at Texas Instruments Inc. before moving to Motorola Inc., where he became the head of its semiconductor division. Jerry Sanders, who founded AMD in 1969, hired Ruiz in 2000 to groom him as a successor.
Long Walk
Ruiz got bachelors and masters degrees in electrical engineering from the University of Texas at Austin and a doctorate in engineering in 1973 from Rice University in Houston. He was born in Piedras Negras, Mexico, according to Rices Web site.