Could Hector Ruiz, AMD's former CEO, have illegally tipped off investors about the spinning off of AMD's manufacturing business? Perhaps that'll be for the courts to decide, but nevertheless, the Wall Street Journal quotes "a person familiar with the matter" as saying Ruiz is tied to a criminal suit filed earlier this month by the U.S. Attorney's office in Manhattan.
The suit alleges that an "unnamed AMD executive"—Ruiz, according to the WSJ's source—shared information about the spinoff with Danielle Chiesi of hedge fund New Castle Partners. Five other parties are involved in the case, including Galleon Group co-founder Raj Rajaratnam and IBM Senior VP Robert Moffat. All face "federal criminal and civil charges" yet claim to be innocent.
On September 30, 2008, the unnamed AMD executive allegedly had a brief talk with Chiesi about the spinoff and commented, "You know, we're going to shock the hell out of everybody." Galleon and New Castle subsequently bought AMD shares ahead of the October 7, 2008 reorganization announcement, but the hedge funds ended up not profiting because of the financial crisis.
While the WSJ's tipster points his (or her) finger at Ruiz, the former AMD CEO and current GlobalFoundries Chairman isn't facing any charges at this point. The suit doesn't name him, and it doesn't allege the unnamed AMD executive "traded for himself or received any money for passing along information."
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