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Ex-IBM Higher-Up Could Do Six Months in Jail

Moffat, who pleaded guilty to securities fraud charges back in March, is supposed to be sentenced on September 13

U.S. federal prosecutors want former IBM server and chips chief Robert Moffat, supposedly a candidate to replace IBM CEO Sam Palmisano, to spend six months in jail for passing insider information to love interest New Castle Partners trader Danielle Chiesi, a prime player in the big Galleon hedge fund scandal.

Moffat, who pleaded guilty to securities fraud charges back in March, is supposed to be sentenced on September 13.

Reuters says U.S. attorneys told the judge their recommendation "is consistent with Moffat's plea agreement."

They said, "As far as the government has determined, his motive was to help a woman with whom he was having an intimate, personal relationship." Problem was he knew "full well that she was going to execute securities trades for a hedge fund - one that had approximately $1 billion under management and whose trades could certainly move the market and have a substantial effect on the integrity of the stock market."

Chiesi, who along with Galleon kingpin Raj Rajaratnam has pleaded not guilty to a string of fraud charges relating to the stock of 23 companies, is scheduled to go on trial in January. Rajaratnam, who is trying to get the government's pile of wiretap evidence thrown out of court, ran a string of highly placed tipsters including, it appears, the former CEO of AMD. There's to be hearing on the taps legality early next month.

Moffat is accused of tipping Chiesi off to details of AMD's spin-off of its factories, IBM's sales numbers, Lenovo's results that he was privy to as a non-voting board member and Sun's results that he got when IBM was flirting with buying the place and did due diligence.

Chiesi and Rajaratnam traded on the information. Chiesi's ex-boss, New Castle co-founder Mark Kurland, who unlike Moffat profited financially, was sentenced to 27 months in prison in May.

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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