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Ex-IBM Server Chief Expected To Plead Guilty to Corruption Charges

Moffat had access to the Sun financials because IBM was doing due diligence on the company with a thought to buying it

Robert Moffat, the former head of both IBM's server and chips units, who was arrested in October in the first dragnet of culprits connected with the now infamous Galleon Group hedge fund and its alleged insider trading ring, is expected to wave indictment and plead guilty, according to papers filed with the courts Tuesday.

Based on wire taps, Moffat, widely characterized as a potential replacement for IBM CEO Sam Palmisano, was charged in October with disclosing the earnings of both IBM and Sun Microsystems and the details of an AMD restructuring to Danielle Chiesi, then a trader at New Castle Funds.

Moffat had access to the Sun financials because IBM was doing due diligence on the company with a thought to buying it. He knew all about AMD's deal with Abu Dhabi because IBM Microelectronics, which he ran, was AMD's semiconductor process partner and would be licensing its spun-off factories.

Chiesi is supposed to have traded on the insider information herself and shared it with Raj Rajaratnam, the head of Galleon and ring's alleged kingpin. The authorities say the pair made a killing.

All the insider trading done almost exclusively in tech stocks is supposed to have added up to a $50 million windfall.

If the signals are right, Moffat will become the 11th person out of the 21 charged to plead guilty after waving indictment in what is supposed to be the biggest hedge fund insider trading case ever in America.

If he waives indictment, the prosecutors will file a so-called "criminal information," a stand-in for a grand jury indictment. It's not clear when Moffat would appear in court. It's also not clear if he will cooperate with the authorities as others have and testify.

Of the six people originally arrested in October, only Rajaratnam and Chiesi have pleaded not guilty. Rajaratnam is trying to get the thousands of hours of wire taps thrown out of court. The pair goes to trial on both civil and criminal charges later this year.

More Stories By Maureen O'Gara

Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at)sys-con.com or paperboy(at)g2news.com, and by phone at 516 759-7025. Twitter: @MaureenOGara

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