Hector Ruiz 'implicated in Galleon insider trading scandal'

29 October 2009

Hector Ruiz, the former chief executive officer of technology company Advanced Micro Devices (AMD), has been implicated in the Galleon insider trading scandal, according to media reports.

Earlier this month, Raj Rajaratnam, the billionaire founder of the Galleon hedge fund, was arrested over allegations he had masterminded the biggest insider trading scam in history.

Five others were arrested with him and in the complaint filed against one of them, Danielle Chiesi, prosecutors alleged an unnamed AMD executive was guilty of passing on secret information in order to trade stocks.

According to prosecutors, the unnamed executive told Ms Chiesi in August 2008 that AMD's manufacturing operation was about to enter into a venture with the Abu Dhabi government.

The partnership between Abu Dhabi and AMD, which was announced to the public in October 2008, led to the foundation of technology manufacturer Globalfoundaries.

An anonymous source has revealed Mr Ruiz, who is now chairman of Globalfoundaries, to be the unnamed executive.

Mr Ruiz is not a defendant in the case but his alleged involvement in the scam, which has been denied by all of the arrested parties, is sure to damage his considerable reputation.

He took the top job at AMD in 2002 and under his tenure the company made gains against Intel, its largest competitor in the sector.

But the purchase of graphics-chip maker ATI Technologies for $5.4 billion left AMD heavily in debt and by 2008 Intel had re-established its market dominance over his firm.

The formation of Globalfoundaries was a key part of Mr Ruiz's strategy to recover market position.

Both Galleon and hedge-fund New Castle, where Ms Chiesi worked, bought shares in AMD before the transaction was announced on October 7th 2008, an announcement date that Mr Rajaratnam had predicted to Ms Chiesi a week before.

Earlier this month, the Sri Lankan government said that Mr Rajaratnam had used the money he made through the scheme to help fund the Tamil Tigers, a terrorist organisation operating in his home country.

By Tony Aynsley

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