IBM senior executive Robert Moffat has been placed on leave by the company following his arrest for insider trading last week.
The charges relate to a hedge fund run by billionaire businessman Raj Rajaratnam.
Mr Moffat, who a the senior vice president and head of IBM's systems and technology group, has been charged with giving insider information to Mr Rajaratnam's hedge fund, the Galleon Group.
It is alleged that Mr Rajaratnam made around $18 million from the scam.
The Sri Lankan government has also accused him of using the money to help fund the Tamil Tigers, a terrorist group.
Mr Moffat is also accused of passing on information about Sun Microsystems when he was completing due diligence on the company for IBM.
Edward Barbini, an IBM spokesman, said: "In view of a US federal investigation into his personal activities, Mr Moffat has been placed on temporary leave of absence and is no longer serving as an officer of IBM."
The company has named Rodney Adkins as acting head of the systems and technology group.
Mr Moffat denies the allegations.
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