Update: An extensive update to this story can be found here
Executives from IBM and Intel have been arrested amid allegations they were involved in an insider trading scam.
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.
The AP reports that these executives (as well as two others who were not named) had passed insider information concerning Google, Polycom, and Hilton Hotels to Rajaratnam, who then executed trades that helped Galleon Technology Funds to get more than $20m in profits between January and July 2007. A report from Reuters says that trades took place at Intel Capital as well and that insider information was used in the trading of stocks for IBM, Sun Microsystems, and Advanced Micro Devices.
Other reports say that Rajaratnam has been charged with four counts of conspiracy and eight counts of securities fraud and that insider trading was also done with Clearwire and Akamai stocks. A report at the Financial Times adds that Danielle Chiesi, an executive from the former Bear Sterns investment bank (now part of JPMorgan Chase) has also been charged with conspiracy along with Rajaratnam.
The U.S. Securities and Exchange Commission is filing civil charges relating to the insider trading and will host a press conference this afternoon in New York. The original complaints were filed in the U.S. District Court for the Southern District of New York. ®