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IBM, Intel Execs Arrested Over Insider Trading 198

Posted by ScuttleMonkey
from the things-are-tough-when-yer-rich dept.
An anonymous reader writes to share a report from The Register stating that executives from IBM and Intel have been arrested as a part of insider trading allegations. "According to a report from the Associated Press, six people were arrested today as part of an insider trading case, including Bob Moffat, senior vice president and general manager of IBM's Systems and Technology Group; Rajiv Goel, director of strategic investments at Intel Capital; Anil Kumar, a director at management consultancy McKinsey & Co; and Raj Rajaratnam, the founder of the $7bn Galleon Group hedge fund."
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IBM, Intel Execs Arrested Over Insider Trading

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  • by sopssa (1498795) *

    Didn't Intel just a while ago discontinue some of their largest product line too?

    And IBM only supports the enterprise companies.

    Even if Google just today reported great increase in profits, maybe recression still has something to do with it.

  • Per TFA, the trading took place from Jan 2007 to July 2007 and they're just making arrests now? Interesting...
    • Re:Well now... (Score:5, Insightful)

      by geekoid (135745) <dadinportland AT yahoo DOT com> on Friday October 16, 2009 @06:38PM (#29773839) Homepage Journal

      No it's not interesting. It takes time to move through all the documents and prepare for the arrest. The word you were looking for is routine.

      • Re: (Score:2, Funny)

        by sexconker (1179573)

        No, routine is doing it, a short investigation showing you're guilty, and then waving your hands like a Jedi and getting off the hook.

        Oh wait, that's only routine for Steve Jobs.

        • Jobs (meaning Apple, Inc) did not wait for an investigation, or the results of one, before alerting the SEC and the Press to the presence of irregularities in their stock option pricing methods. You want to be an Apple/Jobs hater? Fine with me, but focus on the facts in pursuit of that noble quest; there's enough of them.

          I proofread and edited the Apple press release that went to the SEC through EDGAR, and I also considered a little insider trading when I realized I had market-moving information, and 30 min

      • Pah, over a yeah to read some papers and bust someone. Right.~
      • by Potor (658520)
        BRAVO.
    • Re: (Score:2, Insightful)

      by riverat1 (1048260)

      Probably nobody cared to investigate it until last January or February.

      • by sumdumass (711423)

        Perhaps it wasn't known until later and after the fact. A lot of laws that are broken do not get discovered until well after the fact.

      • The recession has changed attitudes. They are now using criminal, rather than civil charges, and the apologists for insider trading have disappeared: people were arguing that it is not really harmful and that it should be decriminalised. While it remained a crime, that attitude probably permeated to the authorities to some extent.

        I know Raj slightly: nice enough a person socially.

    • Re:Well now... (Score:4, Informative)

      by Jaysyn (203771) <`moc.liamg' `ta' `todhsals+nysyaj'> on Friday October 16, 2009 @06:39PM (#29773847) Homepage Journal

      Probably wanted to make sure they had a solid case. If they are guilty, who else thinks these guys will get away with a lower sentence then a non-violent drug user?

      • Re:Well now... (Score:4, Insightful)

        by tsotha (720379) on Friday October 16, 2009 @08:10PM (#29774505)

        Nope. Most people don't realize it, but financial crimes in the US are punished pretty severely. Enron's Skilling got 24 years in jail for conspiracy to defraud investors. You can get less than that for killing somebody. Martha Stewart got six months for lying to an investigator (while she wasn't under oath) about something that wasn't a crime. As with drunk driving for awhile people have this idea the penalties are light, but in the meantime legislators are reacting to public anger and jacking up the sentences. It takes awhile for reality to sink in to the public consciousness. From here [nytimes.com]:

        "You can certainly make the case that things have gotten too harsh," said Samuel W. Buell, a former Enron prosecutor who now teaches law at Washington University in St. Louis. "But the reason why things have gotten so harsh is we went through these years when sentences were too light. Maybe we need a correction in the other direction to get a happy medium."

        I think the drug laws are pretty stupid, too, but where I live first time offenders never get jail time for possession. You can usually avoid jail on the second conviction as well if you don't have a bunch of other stuff on your record. By the third one, well, you're an idiot who's going to jail for being an idiot. But only for a few months.

        • Re:Well now... (Score:4, Informative)

          by rachit (163465) on Friday October 16, 2009 @09:38PM (#29775021)

          Nope. Most people don't realize it, but financial crimes in the US are punished pretty severely.

          I don't have a problem with the amount of punishment, but I'm pissed with how few get caught. If you follow the market and take a look at important announcements like rate cuts, economic numbers, earnings reports, etc., you could often (not always) see high volume trade before the announcements pre-announcing the result. Its sad that people almost never get caught, considering how often it happens.

        • by couchslug (175151)

          Drug crimes are often victimless, financial crimes not so.

        • by tthomas48 (180798)

          No they're not. Are you nuts? How much time do you think you get for robbing a liquor store? Do you know how many liquor stores you'd have to knock over to make even a million dollars? Let's assume that all liquor stores keep $5000 in the till. You knock them over after hours in a way that ensures no one could possibly get hurt, and not armed. That's 200 liquor stores to make a million bucks.

          No chance in hell you're getting less than 24 years for knocking over 200 liquor stores.

          • by tsotha (720379)

            Well, okay. But I wasn't arguing you'd get exactly the equivalent time as burglary. The original poster was trying to say these guys would get less than somebody would for simple possession. Which is wrong.

            Do you get more time for burglary than you would for a white collar crime that netted you the same amount of money? Sure. But I'm okay with that, because no matter what the burglar intended, people get hurt during burglaries.

        • by epine (68316)

          Most people don't realize it, but from time to time financial crimes in the US are punished pretty severely. Enron's Skilling got 24 years in jail for conspiracy to defraud investors.

          There, fixed that for you. Never thought I'd say that, but I just did. I don't know if this link is any good, it's just the first one I found.
          America Has Become Incarceration Nation [alternet.org]
          Circa not so long ago, America had 2.2 million people incarcerated, 5 to 8 times the rate of any other industrial nation, and one guy is serving a

      • Re:Well now... (Score:5, Interesting)

        by MarkvW (1037596) on Friday October 16, 2009 @08:14PM (#29774527)

        I totally agree with you.

        These people are going to have the very very best investigators, experts, and lawyers. They are going to examine every nook and cranny of the case in the attempt to find one little crack of reasonable doubt that will enable them to beat the rap.

        The FBI doesn't just need to dot every i and cross every t, they need to develop a case so tight that even the most moronic juror will see the wrong clear as day, when the best lawyers in the world are trying to obscure everything.

        On top of that, the US Attorneys don't like to go to trial unless they have a slam dunk. Losing makes them (and their administration) look bad--and image is sooo important!!

        Bottom line is that the FBI had to work their ass off to get the goods on these guys and we should all damn well appreciate it!

        • No, it's because of Double Jeopardy. You can't be tried twice for the same crime on the same set of facts. They have to get a slam dunk because the court (awesome pun) is completely ripped from under their feet after that. It has absolutely nothing to do with image though most of the uneducated Jerry-Springer-watching public does think that way. Case in point.
        • Whatever makes you think the FBI did any significant part of this investigation? Even when the FBI arrests someone, the case is often assembled by the victims, especially of fiscal fraud.

    • by spydum (828400)

      The SEC is overwhelmed with work -- so you can imagine that building a case against >6 people took them some time..

  • by thetoadwarrior (1268702) on Friday October 16, 2009 @06:40PM (#29773853) Homepage
    Helping the Nazis is worse than insider trading.
  • Corrupt Complete. (Score:3, Interesting)

    by sitarlo (792966) on Friday October 16, 2009 @06:43PM (#29773881)
    Does this surprise anyone? Insider trading must be commonplace at the executive level across most industries these days. How else, but corruption, do talentless, unethical, unproductive sociopaths get paid? These are all lucrative positions to hold, why do they need to cheat to get more bread? Meanwhile, honest mom and pop outfits are folding like lawn chairs and hardworking people are in debt beyond hope just to from month to month. Will somebody please flush the elitist toilet?
    • by frank_adrian314159 (469671) on Friday October 16, 2009 @07:22PM (#29774187) Homepage

      Will somebody please flush the elitist toilet?

      Elitist is a loaded term used by useful idiots, seeking to lump together people of above-average intelligence, (supposedly) more highly refined culture, and (very, very secondarily) the wealthy into a political target group that can be exploited by the right wing populist. Unfortunately, this normally results in the demise of smart people (who cannot defend themselves), while leaving in place the wealthy (who can). In doing so, the right wing defang a properly targeted populist revolt that might actually change the system, which is based on economic class/power differences rather than on cultural/IQ differences. Doing this ensures that the fundamental class system, determined by power structures dictated by economics and wealth are never changed, leaving the idiots in the lower class forever subservient. Wash, repeat.

      So have a ball flushing your elitist toilet and wave back from the sewer outlet as you try to figure out why that doesn't change a damn thing.

      • Elitist is a loaded term used by useful idiots

        You keep using that word. I do not think it means what you think it means.

        Useful idiot was Stalin's term for Westerners who sympathized with the Soviet system and wished to implement it in their own free countries. Stalin was well aware of the horrid nature of his regime, and found it baffling that anyone would actually want to perpetrate such a thing on their countrymen. The more you know...

      • by drinkypoo (153816)

        Elitist is a loaded term used by useful idiots, seeking to lump together people of above-average intelligence

        Thank you for demonstrating that you are not one of these people! Elitist is a term used to describe people who think they're part of the best of the best, and treat others accordingly. Period, the end. In fact, it talks about their attitude, not about their financial status. Why don't you try looking at a dictionary sometime? I hear they have a few online.

  • Bob Moffat et al (Score:5, Interesting)

    by router (28432) <a.r@gmPARISail.com minus city> on Friday October 16, 2009 @06:44PM (#29773885) Homepage Journal

    Nice. So executives at Intel, IBM, Bear Stearns, and McKinsey were tipping off a Billionaire hedge fund manager. Any wonder _how_ he made those Billions, then? And all of them massive contributors to politicians. How nice. These idiots should all go to jail, for a very long time. Maybe, use the per capita income of ordinary Americans to judge their prison terms; 25M/43k/yr = 500 years between them. Some of them _might_ get out in time to die.

    andy

    • Re: (Score:2, Funny)

      by Anonymous Coward
      If you threw everyone who had a billion dollars or more in jail, you would reduce the percentage of innocents in jail today.
  • Honestly though... (Score:4, Insightful)

    by Sibko (1036168) on Friday October 16, 2009 @06:44PM (#29773887)
    Business as usual for corporations. The only thing out of the ordinary here is that they got caught.
    • by irtza (893217)
      It was the people running the corporations. Don't let them hide behind the company on this one - let the people involved stand for themselves and be judged in a court of law. I don't believe the companies were charged with any wrongdoing on this one.
  • by Antique Geekmeister (740220) on Friday October 16, 2009 @06:57PM (#29774005)

    I'm afraid that insider trading is deeply, deeply frowned on by most companies, who put strong clauses in their confidentiality agreements, and at some larger companies provide "training" about how not to do it. I've attended such training several times, as part of corporate mergers, and it's striking how thee announced policy does not apply to VP's in practice: does not apply to "corporate partners": and does not apply to the people who have the most to trade with and the most to gain. It _does_ apply to the peons, the people with stock options who might want to trade them in at the right moment but whose activity might pre-announce and thus reduce the profitability of the corporate changes which are the direct knowledge of those most with the most to gain from insider trading.

    Yes, I've become extremely cynical about this: I know VP's who really try to help their companies and improve their products, but I've been running into far too many since the Dotcom boom who simply studied how to make their bundle and get out with the last glowing quarter on their resume, and get out before the SEC or the market stomps their grandiose "big vision" plans into the dust.

    • by Darth Cider (320236) on Friday October 16, 2009 @07:47PM (#29774371)

      I blame Gordon Gekko. No joke. Ever read Oliver Stone's comments about Wall Street? He's horrified by how many stockbrokers and money managers and accountants and traders come up to him and say, "Thanks. That movie changed my life." Gordon Gekko, who said he made 800 thou on his first real estate deal, and it was better than sex, but now it's just a day's pay. Gekko only got caught because he made the mistake of angering a protege who got too close. The latest batch of Gekko wannabes won't make that mistake.

      Seriously, if anyone with inside information wanted to cash in on it, how difficult would it be not to get caught? Just make sure not to leave a trail or be obvious about it. In fact, this is probably factored in to every valuation - as a kind of value leakage, a toll. The cost of doing business. Things could only have gotten a lot more sophisticated since Gekko was king. We're only seeing the tip of the iceberg.

      • Re: (Score:3, Interesting)

        by lawpoop (604919)
        I heard the same thing in an interview with Michael Lewis, who wrote Liar's Poker [amazon.com], about Wall Street CEOs in the 80s and 90s. The big bombshell that he dropped was that some CEOs were making bonuses upwards of one million dollars. He said that after he wrote that book, he would get letters from Ohio University students asking how they could get jobs like that.
      • Seriously, if anyone with inside information wanted to cash in on it, how difficult would it be not to get caught? Just make sure not to leave a trail or be obvious about it.

        It's not trivial to successfully hide insider trading. When you're talking about executives moving thousands of shares, those moves must be reported and will be placed under a microscope. Regulators have statistical models, that will raise red flags if trading patterns are unusual, not to mention the potential of alienating other trad

      • by Spy Handler (822350) on Saturday October 17, 2009 @01:51AM (#29775883) Homepage Journal
        I also recommend reading How the servant became the predator [newdeal20.org]: analysis on the financial sector and how it's damaging the real economy.

        This part is especially worthy of note:

        "The U.S. real economy suffers from critical shortages of employees with strong mathematical, engineering, and scientific backgrounds. Graduates in these three fields all too frequently choose careers in finance rather than the real economy because the financial sector provides far greater executive compensation. Individuals with these quantitative backgrounds work overwhelmingly in devising the kinds of financial models that were important contributors to the financial crisis. We take people that could be conducting the research & development work essential to the success of our real economy (including its success in becoming sustainable) and put them instead in financial sector activities where, because of that sector’s perverse incentives, they further damage both the financial sector and the real economy."
        • by astar (203020)

          I am a fdr type guy. So I read the cite. Probably cops, but maybe just degenerate. Pretty much technophile, which I admit might play well on slashdot. Support sustainable whatever. Notice they liked the post-sputnik era, but as far as I can tell, just become we put an emphasis on science and engineering. Liked the tech bubble, and that is just inexplicable. Did not mention Roosevelt's big industrial push like the TVA project. Pretty much just anti-corruption.
          No program. They had a comments section,

  • with vertical steel bars from side to side and horizontal blue bars at the top and bottom.

  • by Wansu (846) on Friday October 16, 2009 @08:58PM (#29774809)

    they can arrest everyone who has ever worked for Goldman Sachs or any of those other bankster firms who are now heaping lavish bonuses on their people, paid for by taxpayers who are becoming unemployed and homeless.

    These IBM/intel guys are small potatoes. Make Geithner and Paulson do the perp walk.

  • by winomonkey (983062) on Friday October 16, 2009 @09:26PM (#29774949)
    A guy named Anil Kumar charged with insider trading ... I, I just don't know where to start with this one.
  • Sorry, but I'm sure the real criminals got away, these guys are probably fall guys.

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