ANOTHER GUILTY PLEA IN GALLEON
The blue collar tactics continue to yield guilty pleas for the government in the Galleon insider trading cases. This week Robert Moffat, Jr. pleaded guilty to a two count information charging conspiracy to commit securities fraud and securities fraud based on his role in the on-going cases. U.S. v. Moffat, (S.D.N.Y. Filed March 29, 2010). This is the latest in a series of guilty pleas the government has secured in these cases as discussed here.
From August through October 2008, defendant Moffat engaged in an insider trading scheme, tipping Danielle Chiesi regarding three stocks. Mr. Moffat is a former senior vice president and group executive at IBM. Ms. Chiesi is a friend who worked at New Castle Partners, an equity hedge fund. The tips involved IBM, Advanced Micro Devices, Inc. and Lenovo Group Ltd., where Ms. Chiesi was a non-voting member of the board.
In September 2008, Mr. Moffat provided Ms. Chiesi with inside information about IBM and Lenovo. Specifically, he told Ms. Chiesi about the financial performance for each company for that quarter prior to the release to the information.
During the same time period, two conversations in which Mr. Moffat provided his friend with inside information were intercepted with a wire tap and captured on tape. In an August 22, 2008 telephone call, Mr. Moffat told Ms. Chiesi about a business deal in which AMD would spin off its manufacturing business into a separate entity. IBM was involved in the transaction because AMD needed a license from the company in connection with the deal. Mr. Moffatt assured Ms. Chiesi that there was “zero” chance the deal would not go through.
In a second intercepted telephone call one month later, Mr. Moffat told Ms. Chiesi that AMD was going to try and announce the deal by October 10, 2008. Prior to the actual deal announcement on October 7, 2008, Ms. Chiesi had New Castle trade in the securities of AMD and IBM. Despite having inside information, the trades were not profitable according to the court papers because of the market turmoil. The date for sentencing has not been set.
Mr. Moffatt has also been named as a defendant in the parallel SEC case, discussed here.