IBM Exec. Pleads Guilty To Tipping Off Rajaratnam Co-Defendant

Mar 29 2010 | 2:45pm ET

A former top executive at IBM is the 11th person to plead guilty in the Galleon Group insider-trading case.

Robert Moffat said he passed on confidential information to Danielle Chiesi, a former executive at hedge fund New Castle Partners and the co-defendant of Galleon founder Raj Rajaratnam. He pleaded guilty to conspiracy and securities fraud in Manhattan federal court this morning.

Moffat, who is not cooperating with investigators, told U.S. Magistrate Judge Frank Maas that he tipped Chiesi off about sales at IBM, a restructuring at Advanced Micro Devices and earnings at Lenovo Group.

“I knew the information I provided would be helpful to her,” Moffat said. His lawyer added, however, that Moffat did nothing more than pass on the information.

“While he has pleaded guilty, it is also important to understand that he never engaged in any trading in connection with the transactions involving AMD, Lenovo or IBM, and received no money or other financial benefit from anyone relating to those transaction,” Kerry Lawrence told the judge.

With Moffat’s plea, prosecutors have now won guilty pleas from 11 of the 21 people charged in the $50 million insider-trading case. Nine others, including Rajaratnam and Chiesi, have pleaded not guilty.

Despite his lack of cooperation, Moffat faces only six months in prison when he is sentenced on July 26. Once considered a possible CEO candidate at IBM, Moffat was senior vice president and group executive at the company’s systems and technology group before his arrest in October.

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