Ex-IBM exec denies SEC charges on Galleon
NEW YORK (Reuters) - A former senior IBM Corp executive denied being involved in a sprawling hedge fund insider trading case and asked a court on Wednesday to dismiss civil charges by the U.S. Securities and Exchange Commission.
Robert Moffat, who was replaced as head of the IBM hardware division on October 30, did admit to speaking to co-defendant Danielle Chiesi of hedge fund New Castle. Some of the other defendants also denied the charges or did not answer them in court filings on Wednesday.
Moffat "denies that he provided material nonpublic information" on IBM, Sun Microsystems Inc and Advanced Micro Devices Inc, his lawyers said in papers filed in Manhattan federal court.
Moffat was arrested on civil and criminal charges on October 16. He was accused of passing on insider information in a case that ensnared Galleon Management LP hedge fund, its billionaire founder, Raj Rajaratnam, and a score of traders and employees of some of America's best-known companies.
One defendant Rajiv Goel, who was accused of tipping Rajaratnam about Intel Corp earnings in 2006 and 2007 while he was an executive at Intel's venture capital arm, asserted his Fifth Amendment rights not to be a witness against himself.
In answer to the market regulator's charges on Wednesday, Chiesi's lawyers said she "denies any allegation that (she) received, distributed, or otherwise made use of material nonpublic information" and had knowledge of other allegations in the case.
A former New Castle general partner, Mark Kurland, and the fund itself were also charged by the SEC.
"New Castle did not itself engage in unlawful conduct, and New Castle is not liable for any unlawful acts that may have been committed by Danielle Chiesi and Mark Kurland," lawyers for the fund said in court papers.
SEC spokesman John Heine declined to comment.
Most of the accused had expertise in tech stocks, and the allegations included passing inside information on earnings announcements, takeovers and contracts on 10 companies, generating $25 million in illegal profits, according to the SEC.
Moffat's lawyers said their client "admits that in January 2009 IBM was conducting preliminary due diligence concerning Sun, denies knowledge or information sufficient to form a belief to the truth of allegations that Sun provided IBM with its Q2 2009 earnings results in advance of a January 27, 2009 announcement."
Moffat was one of several IBM executives involved in performing preliminary due diligence on Sun in January, the court document said. It said Moffat "admits that Chiesi and he communicated from time to time during early 2009."
The market regulator filed civil charges against 15 people and six funds. U.S. prosecutors criminally charged 20 people, including five who pleaded guilty and are cooperating with the investigations.
On November 24, Sri Lankan-born Rajaratnam, a U.S. citizen who is free on $100 million bail, attacked the regulator's lawsuit and said government wiretaps violated his constitutional rights.
Lawyers for another defendant, former McKinsey & Co executive Anil Kumar, said in court papers on Wednesday that the case against Kumar "is a legal conclusion to which no response is required."
The case is SEC v. Galleon Management LP et al, U.S. District Court for the Southern District of New York, No. 09-08811.