Hector Ruiz, chief executive at AMD between 2002 and 2008, allegedly had an “intimate relationship” with a Bear Stearns hedge fund manager who was feeding secret information to a billionaire now on trial for insider trading.
Ruiz has not been charged with any involvement in insider trading, and has said the relationship with the Bear Stearns manager was not intimate.
But according to government witness testimony recounted in a New York court this week – in the Galleon hedge fund insider trading case – Ruiz was in a relationship with Bear Stearns manager Danielle Chiesi while at the helm of AMD. Chiesi, once a beauty queen, has pleaded guilty in the case.
The witness on the stand was Anil Kumar, a former partner at management consultancy McKinsey. Kumar testified last week that he had personally provided the billionaire founder of Galleon – Raj Rajaratnam – with inside information on AMD for a large fee, against McKinsey client confidentiality rules.
After Rajaratnam had established contact with Chiesi around the AMD topic, Kumar said Rajaratnam told him that his value was “diminished” because “there’s now another source coming directly from the CEO”.
Rajaratnam is accused of making $45 million from insider information, in the largest such court action in recent history. Information that Rajaratnam allegedly gleaned from Chiesi includes multibillion dollar plans by AMD in 2008 to sell its chip-manufacturing business to a wealth fund of Abu Dhabi. Rajaratnam denies the charges and says he only traded on well-researched, legitimate information.
A spokesperson for Ruiz said the testimony around the AMD chief executive’s relationship with Chiesi was inaccurate. “Any suggestion that the relationship was intimate is untrue,” he said.
Chiesi is also accused of having an intimate relationship with Robert Moffat, a former IBM senior VP, and trading on information from him. Both Chiesi and Moffat have pleaded guilty.
Over the first two days of hearings, prosecutors played the court tapes of phone conversations between Rajaratnam and various associates. In one call, Rajaratnam is heard telling a friend that he needed to create an “email trail” to hide the secret information being taken.
The case continues.
