SAN FRANCISCO Hector Ruiz, the former CEO of Advanced Micro Devices Inc. (AMD), allegedly supplied confidential information about AMD's plans to spin off its manufacturing operations to a defendant in the Galleon Group insider-trading case, according to a report Tuesday (Oct. 27) by the Wall Street Journal.
According to the report, Ruiz has not been charged with any wrongdoing. The report cites an unnamed source "familiar with the matter."
Six people, including the founder of hedge fund Galleon Group, have been charged related to alleged insider trading over the spinout of AMD's manufacturing arm into Globalfoundries Inc., a joint venture between AMD and Abu Dhabi's Advanced Technology Investment Co. Ruiz is the chairman of Globalfoundries.
According to the Journal story, a complaint filed in
New York federal court alleged that an AMD executive shared confidential information with Danielle Chiesi, one of the six people charged in the case, about the spinout. That AMD executive has now been identified as Ruiz, according to the report.
According to the report, Globalfoundries declined to comment. An AMD spokesperson declined to comment on the investigation and said the company is not aware of any criminal allegations against any of its current or former employees, according to the report.
AMD's stock price fell about 2 percent in after hours trading following publication of the news regarding Ruiz's alleged involvement in the disclosure of confidential information about the company's reorganization plans.
The stock, which tumbled 5 percent during regular trading hours on Tuesday (Oct. 27), fell further after hours to $5.05 from the closing price of $5.15.
AMD's stock had risen sharply in the last 12 months as the company began implementing a wide range of reorganization and cost control measures, including the spinoff of its manufacturing operations to GlobalFoundries, a move that injected much needed capital into AMD's operations and helped to cut down long-term debts.
AMD's stock price traded as low as $1.62 in only the last 12 months.
The eventual spinoff of AMD's manufacturing operation was not a secret within the industry as speculation grew about steps the company could take to reduce operating costs. Industry analysts had emphasized the manufacturing spinoff even as AMD talked repeatedly of the need to reduce the amount of money it had to spend on manufacturing to keep pace with rival Intel Corp.
Hence, it isn't necessarly surprising that Ruiz would haved discussed the company's plans with potential investors. It was clear more than a year ago that AMD was not in a position to continue funding manufacturing at the required level, and that the best option available to the company was to work with fund investors or other financial sources.
Such discussions would have involved the disclosure of sensitive information to potential partners.