Norb Vonnegut: CEO Overboard

October 28th, 2009

The terrible news keeps coming at Galleon. The AMD executive who tipped inside information, according to The Wall Street Journal, was none other than the former CEO.

A criminal case filed by the Manhattan U.S. Attorney’s office earlier this month alleged that an unnamed Advanced Micro Devices Inc. executive shared confidential information about the chip maker with a defendant in the case. The AMD executive is Hector Ruiz, then AMD’s chairman and previously chief executive, according to a person familiar with the matter.

Why would a CEO tip inside information?

Go figure. If the allegations are right, we can rule out money as the primary motivation. Forbes reported that Ruiz made $9.02 million in 2006 as the CEO of AMD. The magazine valued his company stock at $8.8 million.

The car payments look safe.

We can also rule out any sense of “being invulnerable” or “above the law.” The Wall Street Journal accounts reek of dread between the lines. There’s a sense of vulnerability in the discourse.

On July 24, 2008, Chiesi called Rajaratnam and told him she was talking to an unidentified Akamai executive “about the family” and how “you’re the only person in the family that helps me,” the charges allege.

Nobody’s too huge to jail.

I don’t know any of the players personally, the Galleon employees or the the former CEO of AMD. But if the allegations are right, my guess is they succumbed to a perilous mindset: win every time at any cost.

Presumably, there was a glory to betting huge and being right–a mindset I explore in Top Producer. The highs from winning more than trumped considerations of honest play. Of course, there was one problem.

They got caught.

Now, it’s game over. Wiretaps, once the bane of drug lords and Mafiosi, are working their way through Hedgistan, according to Bloomberg news. The Galleon recordings will play out in a packed court room. The tapes will remind anyone trading on inside information of the game-ending consequences.

Go directly to jail. Do not pass Go. Do not collect $200 (million).

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