WSJ ties former AMD CEO Ruiz to insider trading case

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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    • MadManOriginal
    • 13 years ago

    Hell they profit greatly even when things go terribly, you mentioned ‘golden parachutes.’

    • vikramsbox
    • 13 years ago

    He’s been rewarded in a rather strange way by AMD- by being made CEO or Chairman of Global foundries.
    Heck..seems to be paying off being a crook…

    • blastdoor
    • 13 years ago

    Thank you Dr. Pangloss.

    • blastdoor
    • 13 years ago

    I think that insider trading is the least of Ruiz’s faults. Ruiz played the classic CEO game — heads I win, tails you lose. He made multiple “bet the company” gambles and lost, knowing that he would have a golden parachute. We’ve seen a lot of this over the last decade or two — CEO types make huge gambles knowing that they will never personally be held accountable if things go wrong, but will profit greatly if things go right.

    • SomeOtherGeek
    • 13 years ago

    That is easy! Duh… It is the Red pill, no the Blue pill, No! The Red one! Nonono, the blue one… Oh F**K it! I’ll take them all!

    • SomeOtherGeek
    • 13 years ago

    I got the secret of being a CEO! I’ll share it with you… Ready?

    All you have to be is an <drum roll> IDIOT!

    • VILLAIN_xx
    • 13 years ago

    The Blue, The Red, and The Rape pill…

    …hmmm which one? I cant decide.

    • SPOOFE
    • 13 years ago

    I’m not a court of law.

    • designerfx
    • 13 years ago

    a failure of people to use their brains

    • bdwilcox
    • 13 years ago

    Innocent until proven guilty is the rule for a court of law, not the court of public opinion.

    • bdwilcox
    • 13 years ago

    Unless, of course, some insider trading deal might have been ruined with a lower ATI stock price. That’s speculation, of course, but based on the current accusation it may not be that far off.

    • mattthemuppet
    • 13 years ago

    because that’s what retail investors do..

    • BobbinThreadbare
    • 13 years ago

    The thing is, all AMD had to do was wait until the 2000 series cards were out. They were so disappointing ATI’s stock would have fell sharply. If AMD had done their due diligence they should have known how badly the 2000 cards were going to fail.

    • SubSeven
    • 13 years ago

    Again, you are using hindsight. IIRC, at the time, AMD paid thirty some percent premium for ATI. That goodwill represents the excess of amd paid over what ATI was valued at. There is ALWAYS goodwill in a buyout and the amount of goodwill represents managements estimates and and future expectations. As we can see today management’s estimates and expectations were quite WAY WAY off but i personally can’t hold them against it because i don’t know what they know and what they thought back then. These things happen. AMD wasn’t the only one that was caught with their paints down when the proverbial sh*t hit the fan. Pretty much all of wall street and everyone one else was on that same boat. The one thing I really agree with you is that the decision to pay mostly cash was a big folley. They were overly bullish and too optimistic and vastly underestimated Intel at the time. This cost them. Heck they are still paying for it today. To me, that was their biggest mistake.

    • SubSeven
    • 13 years ago

    Marketing? Yah great waste of money that is. No matter what Intel’s marketing is better and their name is established and has been established for much longer than AMD. Heck, people have intel inside tatooed on their forheads these days. I don’t think marketing would have helped AMD much. On the R&D side, yes it can help but don’t forget Intel can bury AMD in R&D simply because they have more money and they can. Also, spending on R&D doesn’t automatically mean it yields fruitful results. At the time that purchase was their best option at creating value (or so they thought).

    • WaltC
    • 13 years ago

    Why did you sell and take such a loss? I’d have kept at least half of it until the share price rebounded. Plenty of people made a bundle on AMD by buying low and selling high a couple of years ago. Sounds like you bought high and sold low…?

    • Sargent Duck
    • 13 years ago

    That $5 Billion would have been much better spent, oh, I don’t know…Researching and developing to compete with Intel? Increasing advertising so Joe six-pack knows about AMD? Getting out of debt? Building a new fab to increase production?

    A joint partnership with ATI would have been a much better choice, or even a merger, rather than a buy-out.

    • accord1999
    • 13 years ago

    It was pretty obvious at the time of the purchase that it was too expensive for AMD when over half of the value of ATI was booked as “goodwill”. Heck, it was barely a year before AMD started taking charges against it.

    But that wasn’t the main problem, the main problem was that AMD paid nearly all of it in cash for ATI.

    And with hindsight, it’s become obvious that it was a terrible decision that greatly weakened AMD and forced AMD to spin-off its manufacturing division. Basically, buying ATI at $5 billion mainly in cash was to AMD as buying Golden West was to Wachovia.

    • eitje
    • 13 years ago

    “Hey, just because you tacked on $3.7 billion dollars in long term debt and your stock plummeted 56.2-percent doesn’t mean you’re doing a bad job…”

    §[<http://www.engadget.com/2007/12/14/amds-finanical-woes-dont-stop-hector-ruiz-from-nabbing-a-raise/<]§

    • SubSeven
    • 13 years ago

    I wholeheartedly agree. They are all the same. I for one don’t hate Ruiz. I think he could have certainly done a much better job in some aspects but I greatly support his decision to acquire ATI. I won’t go into whether or not he paid too much for it or not because I don’t have all the knowledge he had at the time. Based on what was known back then it might have been just the right amount. At any rate, that’s speculation and using hindsight is unfair. I just feel that the move made AMD a much stronger company overall and greatly improved its competitive position. Granted it saddled AMD with quite a bit of debt but should they stop the bleeding (and I believe they are very close), they will be in great future position to reap tremendous benefits. Thusfar, AMD is surviving in one of toughest economies imaginable (not to mention competeting against the 800lb gorilla and its whole freaking family) and they are improving in this evironment. To me, that’s a sign that they are doing at least something right.

    • shank15217
    • 13 years ago

    What executive doesn’t line their pocket?

    • shank15217
    • 13 years ago

    Yes and you felt the need to post on this thread. Point out one specific thing Ruiz did that caused AMD to lose so much value.

    • tfp
    • 13 years ago

    The one thing this guy isn’t innocent of is running the company into the ground and being over paid to do so. This is just a side issue.

    • tfp
    • 13 years ago

    At least a people on these forums said he was a problem and have pointed out past failures and they were ignored, I’m sure others have done the same else where.

    At the end of the day if Ruiz did the crime he might have lost people that invested in AMD more money because of the insider trading but those people were going to loose money in AMD either way because of the extremely poor way the company was run.

    • SubSeven
    • 13 years ago

    You are right, hindsight is 20/20. But I am not saying that he should know the future. I am saying that he should recognize the risks of investing and understand that the possibility of having real losses is substantial. People don’t get this fact and invest thinking that they are guaranteed to “win” all the time not even thinking about macro economic events (only focusing on micro). Again, if he trusts everything that was said, the got what he deserved. Secondly, what was said at the time was based on expectations of that time. That doesn’t make them liars or thieves as he is implying. Also, I am in the same boat as our friend here; i too have lost quite a bit (went into AMD as high as 16) and i think just about everyone investing in AMD is still in the red. However, unlike him I don’t make it a point to blame others for my stupidity so that i can sleep better. People need to take responsibility for their actions instead of delegating it.

    • sparkman
    • 13 years ago

    AMD fans already hated Ruiz. But now, OMG.

    • liquidsquid
    • 13 years ago

    Geeze, vicious. Hindsight is 20/20 and you are as much saying that he should have known everything about the future before investing. At the time of investment, I am sure he trusted enough in what was said to invest that much money.

    • ub3r
    • 13 years ago

    Take the rape pill, and ill show you how deep the rabbit hole really goes..

    • SubSeven
    • 13 years ago

    Don’t blame others for your lack of investing knowledge and poor performance. As I understand it, Ruiz didn’t come knocking at your door and force you to buy AMD shares at gunpoint. Secondly, if you purchased AMD shares because you believed whole heartedly what Ruiz was saying without taking everything with a grain of salt, i say you got EXACTLY what you deserved. If Ruiz is guilty, he will pay for it. Don’t associate his possible guilt with your idiocy and poor investing.

    • mph_Ragnarok
    • 13 years ago

    woke up with a broom in your a$$?

    • poulpy
    • 13 years ago

    reply fail?

    • SubSeven
    • 13 years ago

    Whoops. Reply fail.

    • jdaven
    • 13 years ago

    Whatever happened to innocent until proven guilty?

    • tfp
    • 13 years ago

    You guys need to understand a company and how it’s run before you invest in it you have no one to blame but yourselves.

    • mcnabney
    • 13 years ago

    I only lost thousands on AMD. You need to check out some of the executive compensation packages before you go pitchfork shopping.

    • asdsa
    • 13 years ago

    There is mexiCANs and mexiCAN’Ts. Ruiz is the latter. 🙂

    • poulpy
    • 13 years ago

    Given the usual lack of reaction of any kind every time the investment fund who co-owns Global Foundries is referred to as /[<"the Arabs"<]/ and the /[<"They Took Our Jobs!"<]/ (or /[<"Dey Tuk R Jarbs!"<]/) like comments I'd have thought this would be accepted too.

    • tejas84
    • 13 years ago

    I don’t see what him being Mexican has to do with this insider trading??

    alex666 is right take your racism to [H]ardOCP or someplace like that

    • Vasilyfav
    • 13 years ago

    He actually is mexican though.

    • alex666
    • 13 years ago

    TR is not a place for racist comments. Ruiz will be charged and convicted, or perhaps he won’t. It has nothing to do with his ethnicity. Why don’t you take your racism somewhere else.

    • Sargent Duck
    • 13 years ago

    I put 100% of the blame for AMD’s struggles on his shoulder. Just as he bent AMD over, I hope he gets bent over in prison.

    • Vasilyfav
    • 13 years ago

    I know that talentless mexican was a worthless piece of scum. Hoping to see him convicted for running AMD (almost) into the ground.

    • HighTech4US
    • 13 years ago

    As an ex-investor of AMD (with losses in the mid 5 figures) I would like nothing more than to see him in prison stripes.

    Ruiz has LIED outright during many AMD earnings conference calls (I still remember his $2 is do-able) quote. Because of these lies us individual investors lost real dollars.

    Now it seems that he gives insider information to hedge fund operators. I wonder what he got in return for that information.

    It’s time to send a very strong message and send people who participate in insider trading to prison.

    • tfp
    • 13 years ago

    Yep it will be the second chip company he ran into the ground.

    • kvndoom
    • 13 years ago

    Yeah I was glad to see him gone from the helm. I still fear it might be too late for the company to recover from the poor management he provided.

    • flip-mode
    • 13 years ago

    Whatever the case, I am not a fan of Ruiz. That bastard lined his own pockets all the while as AMD sunk further and further into the hole. So, if he pleads or is found guilty in this case, I hope they rape his pocket book accordingly.

    • Krogoth
    • 13 years ago

    How deep does the rabbit hole go?

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