|By Maureen O'Gara||
|October 18, 2009 09:45 AM EDT||
The United States government has accused Robert Moffat, IBM’s server chief, the guy who was negotiating to buy Sun, with betraying Sun’s financial position to Danielle Chiesi, an employee of New Castle Partners, a New York hedge fund, so she could trade on the insider information.
Moffat knew what Sun’s numbers were going to be because he was one of the nine IBMers doing due diligence at Sun this past January.
In a wire-tapped phone call Chiesi made to an unidentified person now cooperating with the government’s investigation she said, “IBM is looking at it as a takeover. The only reason my guy would know that is because it’s his deal. Like, he’s in bed with them….You see what I mean…not because he’s just speculating.”
The news that IBM was negotiating to buy Sun didn’t leak to the Wall Street Journal and hence to the world for another two months.
Armed with the foreknowledge allegedly provided by Moffat that Sun was going to beat the Street – top and bottom – when it reported its December ’08 quarter, New Castle bought Sun shares just hours before Sun posted its numbers on January 27 and made a $900,000 killing on the deal.
The government says Moffat had practice slipping Chiesi insider financial information. When the global economy started melting down last year, he had dinner with her in early September, before IBM’s quarter closed, and reassured her that IBM would pull it out. According to a taped phone call with an unidentified affiliate of New Castle, she said, “He’s saying, you know, [IBM’s] zSeries looks really good. He’s saying that everything looks fine but…it comes down to the…final last week. But he thinks right now that they are on track. As of right now he’s not even worried a little bit, I mean, we think we can beat the numbers this quarter.” Chiesi apparently held onto her position in IBM’s stock.
Then again this past January, when IBM was due to report the results of its December quarter and Chiesi had spoken with Moffat New Castle covered a short position in IBM stock and began picking up more shares.
The government tap found her explaining to the person who’s now a government witness, “I’m buying IBM going into the print,” Wall Street parlance for IBM posting its numbers. “If I wasn’t closer to the situation I’d be, I would so short this fucking thing. But I’m thinking they could beat, and they really could guide up….You know, my guy said easily they could, they could add 30 cents to the bottom line. Easily, easily. That’s what he says, to the bottom line in ’09….I don’t think anybody is talking about a beat this quarter.”
The government’s complaint notes that on January 20 IBM’s Q4 earnings beat analyst expectations by 25 cents and that it expected to do 27 cents better this year than last.
The FBI figures New Castle was up about $500,000 on Moffat’s information.
Three months later Chiesi flat out asked Moffat what IBM’s quarter looked like. She was apparently told the company would miss on revenues by 7%, “miss the short-term signings but make total signings” and earnings per share would be “good,” which is exactly what happened on April 20.
Having made money on Sun’s financial results once, Chiesi got her “ass kicked,” she’s reported saying, on Sun stock when Oracle unexpectedly waltzed in with a $9.50-a-share bid to acquire the company on April 20, supporting the widely held perception that IBM was dumbfounded at the move.
Chiesi was short the stock allegedly because Moffat had told her Sun’s revenues would be down 27% when it reported its March quarter. The Street only estimated it would be down 17%. She was also gambling on Moffat telling her if IBM was going to buy Sun. She hadn’t reckoned on Oracle or Moffat not knowing what was going on.
Moffat is charged with three counts of conspiracy to commit securities fraud, one each for Sun and IBM and the third for AMD, where Moffat in his capacity as head of IBM Microelectronics was in on AMD’s negotiations to spin off its factories into a joint venture with the government of Abu Dhabi. IBM would have to license the venture some of its technology.
In the AMD case they seem to have proven inept conspirators and Chiesi even had a pipeline into AMD in the form of a chatty unidentified AMD executive who apparently hasn’t been charged with any crime. For all the reported discussions between Moffat and Chiesi of the deal’s structure, terms, voting rights, dilution, government approvals, management and timing of the announcement, the government thinks New Castle didn’t profit from its trades in AMD stock “due in part to a global financial crisis that precipitated a broad decline in stock markets in or about September and October 2008.”
New Castle had bought a swat of AMD at $5.44 and another at $4.50 pre-announcement and didn’t begin selling until the price had sunk to $4.25. However, the government’s not sure that New Castle didn’t avoid certain losses by selling put options the day before the announcement, which the hedge fund knew was set for October 7, 2008.
The FBI says Chiesi had been worried that she “would make so much money that her trading might the attention of regulators” so maybe she was relieved in a way.
By her own admission she would never have dabbled in AMD stock without having an inside track. She told New Castle president Mark Kurland that “Unless you were on the phone with [the AMD executive] and had Moffat at you house last night, who the fuck would be buying it honestly.” And to the alleged kingpin of the scheme, billionaire hedge fund manager Raj Rajaratnam, now out on $100 million bail, she was overheard to say she “wouldn’t of touched [AMD’s stock] with a fucking 10-foot pole” if she “wasn’t close to the company.”
According to the US Attorney Moffat is looking at doing five years in jail and paying a fine of $250,000 or twice his gross gain or loss. His playmates are looking at worse.
It’s unclear from either of the two complaints that the government filed with the federal court in New York Friday how exactly Moffat was to benefit financially from the intrigue.
He was the only one of the six people in the ring charged Friday to turn himself in. They went and arrested the others. It’s unclear whether he’s still working for IBM, the company not being exactly forthcoming right now. His bio had disappeared from IBM’s site by early Saturday morning. IBM executives, by the way, are supposed to be well-compensated.
|MADAME P J BAILEY 10/22/09 11:37:33 AM EDT|
Moffat & IBM CEO Palmisano made parallel IBM stock trades on 08-21-08. Palmisano cleaned out the till on August 28, 2009. Will Palmisano's arrest be next ? Visit - ibmTheWidowMaker com
Too often with compelling new technologies market participants become overly enamored with that attractiveness of the technology and neglect underlying business drivers. This tendency, what some call the “newest shiny object syndrome,” is understandable given that virtually all of us are heavily engaged in technology. But it is also mistaken. Without concrete business cases driving its deployment, IoT, like many other technologies before it, will fade into obscurity.
Aug. 31, 2015 09:00 PM EDT Reads: 360
The Internet of Things is in the early stages of mainstream deployment but it promises to unlock value and rapidly transform how organizations manage, operationalize, and monetize their assets. IoT is a complex structure of hardware, sensors, applications, analytics and devices that need to be able to communicate geographically and across all functions. Once the data is collected from numerous endpoints, the challenge then becomes converting it into actionable insight.
Aug. 31, 2015 07:00 PM EDT
Consumer IoT applications provide data about the user that just doesn’t exist in traditional PC or mobile web applications. This rich data, or “context,” enables the highly personalized consumer experiences that characterize many consumer IoT apps. This same data is also providing brands with unprecedented insight into how their connected products are being used, while, at the same time, powering highly targeted engagement and marketing opportunities. In his session at @ThingsExpo, Nathan Treloar, President and COO of Bebaio, will explore examples of brands transforming their businesses by t...
Aug. 31, 2015 06:00 PM EDT Reads: 242
With the Apple Watch making its way onto wrists all over the world, it’s only a matter of time before it becomes a staple in the workplace. In fact, Forrester reported that 68 percent of technology and business decision-makers characterize wearables as a top priority for 2015. Recognizing their business value early on, FinancialForce.com was the first to bring ERP to wearables, helping streamline communication across front and back office functions. In his session at @ThingsExpo, Kevin Roberts, GM of Platform at FinancialForce.com, will discuss the value of business applications on wearable ...
Aug. 31, 2015 03:15 PM EDT
The Internet of Things (IoT) is about the digitization of physical assets including sensors, devices, machines, gateways, and the network. It creates possibilities for significant value creation and new revenue generating business models via data democratization and ubiquitous analytics across IoT networks. The explosion of data in all forms in IoT requires a more robust and broader lens in order to enable smarter timely actions and better outcomes. Business operations become the key driver of IoT applications and projects. Business operations, IT, and data scientists need advanced analytics t...
Aug. 31, 2015 02:30 PM EDT Reads: 415
While many app developers are comfortable building apps for the smartphone, there is a whole new world out there. In his session at @ThingsExpo, Narayan Sainaney, Co-founder and CTO of Mojio, will discuss how the business case for connected car apps is growing and, with open platform companies having already done the heavy lifting, there really is no barrier to entry.
Aug. 31, 2015 02:30 PM EDT Reads: 141
With the proliferation of connected devices underpinning new Internet of Things systems, Brandon Schulz, Director of Luxoft IoT – Retail, will be looking at the transformation of the retail customer experience in brick and mortar stores in his session at @ThingsExpo. Questions he will address include: Will beacons drop to the wayside like QR codes, or be a proximity-based profit driver? How will the customer experience change in stores of all types when everything can be instrumented and analyzed? As an area of investment, how might a retail company move towards an innovation methodolo...
Aug. 31, 2015 02:30 PM EDT Reads: 455
Contrary to mainstream media attention, the multiple possibilities of how consumer IoT will transform our everyday lives aren’t the only angle of this headline-gaining trend. There’s a huge opportunity for “industrial IoT” and “Smart Cities” to impact the world in the same capacity – especially during critical situations. For example, a community water dam that needs to release water can leverage embedded critical communications logic to alert the appropriate individuals, on the right device, as soon as they are needed to take action.
Aug. 31, 2015 12:00 PM EDT
SYS-CON Events announced today that HPM Networks will exhibit at the 17th International Cloud Expo®, which will take place on November 3–5, 2015, at the Santa Clara Convention Center in Santa Clara, CA. For 20 years, HPM Networks has been integrating technology solutions that solve complex business challenges. HPM Networks has designed solutions for both SMB and enterprise customers throughout the San Francisco Bay Area.
Aug. 31, 2015 11:30 AM EDT Reads: 894
SYS-CON Events announced today that Micron Technology, Inc., a global leader in advanced semiconductor systems, will exhibit at the 17th International Cloud Expo®, which will take place on November 3–5, 2015, at the Santa Clara Convention Center in Santa Clara, CA. Micron’s broad portfolio of high-performance memory technologies – including DRAM, NAND and NOR Flash – is the basis for solid state drives, modules, multichip packages and other system solutions. Backed by more than 35 years of technology leadership, Micron's memory solutions enable the world's most innovative computing, consumer,...
Aug. 31, 2015 11:15 AM EDT Reads: 228
As more intelligent IoT applications shift into gear, they’re merging into the ever-increasing traffic flow of the Internet. It won’t be long before we experience bottlenecks, as IoT traffic peaks during rush hours. Organizations that are unprepared will find themselves by the side of the road unable to cross back into the fast lane. As billions of new devices begin to communicate and exchange data – will your infrastructure be scalable enough to handle this new interconnected world?
Aug. 31, 2015 11:00 AM EDT Reads: 161
Through WebRTC, audio and video communications are being embedded more easily than ever into applications, helping carriers, enterprises and independent software vendors deliver greater functionality to their end users. With today’s business world increasingly focused on outcomes, users’ growing calls for ease of use, and businesses craving smarter, tighter integration, what’s the next step in delivering a richer, more immersive experience? That richer, more fully integrated experience comes about through a Communications Platform as a Service which allows for messaging, screen sharing, video...
Aug. 31, 2015 10:30 AM EDT Reads: 649
SYS-CON Events announced today that Pythian, a global IT services company specializing in helping companies leverage disruptive technologies to optimize revenue-generating systems, has been named “Bronze Sponsor” of SYS-CON's 17th Cloud Expo, which will take place on November 3–5, 2015, at the Santa Clara Convention Center in Santa Clara, CA. Founded in 1997, Pythian is a global IT services company that helps companies compete by adopting disruptive technologies such as cloud, Big Data, advanced analytics, and DevOps to advance innovation and increase agility. Specializing in designing, imple...
Aug. 31, 2015 10:15 AM EDT Reads: 303
In his session at @ThingsExpo, Lee Williams, a producer of the first smartphones and tablets, will talk about how he is now applying his experience in mobile technology to the design and development of the next generation of Environmental and Sustainability Services at ETwater. He will explain how M2M controllers work through wirelessly connected remote controls; and specifically delve into a retrofit option that reverse-engineers control codes of existing conventional controller systems so they don't have to be replaced and are instantly converted to become smart, connected devices.
Aug. 31, 2015 09:30 AM EDT Reads: 124
SYS-CON Events announced today that IceWarp will exhibit at the 17th International Cloud Expo®, which will take place on November 3–5, 2015, at the Santa Clara Convention Center in Santa Clara, CA. IceWarp, the leader of cloud and on-premise messaging, delivers secured email, chat, documents, conferencing and collaboration to today's mobile workforce, all in one unified interface
Aug. 31, 2015 04:00 AM EDT Reads: 421
WebRTC has had a real tough three or four years, and so have those working with it. Only a few short years ago, the development world were excited about WebRTC and proclaiming how awesome it was. You might have played with the technology a couple of years ago, only to find the extra infrastructure requirements were painful to implement and poorly documented. This probably left a bitter taste in your mouth, especially when things went wrong.
Aug. 31, 2015 02:00 AM EDT Reads: 453
As more and more data is generated from a variety of connected devices, the need to get insights from this data and predict future behavior and trends is increasingly essential for businesses. Real-time stream processing is needed in a variety of different industries such as Manufacturing, Oil and Gas, Automobile, Finance, Online Retail, Smart Grids, and Healthcare. Azure Stream Analytics is a fully managed distributed stream computation service that provides low latency, scalable processing of streaming data in the cloud with an enterprise grade SLA. It features built-in integration with Azur...
Aug. 28, 2015 07:45 PM EDT Reads: 219
Akana has announced the availability of the new Akana Healthcare Solution. The API-driven solution helps healthcare organizations accelerate their transition to being secure, digitally interoperable businesses. It leverages the Health Level Seven International Fast Healthcare Interoperability Resources (HL7 FHIR) standard to enable broader business use of medical data. Akana developed the Healthcare Solution in response to healthcare businesses that want to increase electronic, multi-device access to health records while reducing operating costs and complying with government regulations.
Aug. 26, 2015 07:00 AM EDT Reads: 191
For IoT to grow as quickly as analyst firms’ project, a lot is going to fall on developers to quickly bring applications to market. But the lack of a standard development platform threatens to slow growth and make application development more time consuming and costly, much like we’ve seen in the mobile space. In his session at @ThingsExpo, Mike Weiner, Product Manager of the Omega DevCloud with KORE Telematics Inc., discussed the evolving requirements for developers as IoT matures and conducted a live demonstration of how quickly application development can happen when the need to comply wit...
Aug. 2, 2015 11:15 AM EDT Reads: 556
The Internet of Everything (IoE) brings together people, process, data and things to make networked connections more relevant and valuable than ever before – transforming information into knowledge and knowledge into wisdom. IoE creates new capabilities, richer experiences, and unprecedented opportunities to improve business and government operations, decision making and mission support capabilities.
Aug. 1, 2015 10:00 AM EDT Reads: 486