Will Moffat, Ruiz Departures Distance IBM, AMD From Scandal?

IBM told employees last Friday that Moffat, at one time considered a rising star in IBM and a possible successor to IBM Chairman Sam Palmisano, is no longer an employee of IBM.

Separately, AMD manufacturing spin-off GlobalFoundries on Monday confirmed that Ruiz will step down as chairman of the company. According to a statement, Ruiz will take a leave of absence, effective immediately, and then formally resign from the GlobalFoundries board on Jan. 4.

IBM said Rod Adkins, who was named temporary general manager of IBM's System and Technology Group on Oct. 19 in the wake of Moffat's arrest, was named permanently to the top hardware post overseeing the $20 billion business.

Ruiz will be replaced by Alan E. "Lanny" Ross, who will serve as interim chairman until the company's nine-member board of directors appoints a permanent replacement, GlobalFoundries said.

Ross is a current GlobalFoundries board member and was previously president and CEO of Broadcom. He also held various executive positions at Rockwell Automation, National Semiconductor and other semiconductor companies.

"This is a clean, quick break," said one top IBM solution provider partner executive. "You don't want these things lingering on. This is a plus for IBM. IBM prides itself, as it should, on its ethical reputation. When you have something like this it tarnishes that, but if you take quick action it upholds that reputation."

Moffat was charged Oct. 16 in what federal authorities are calling the largest alleged hedge fund insider trading case. The case, which marks the first time court-authorized wiretaps have been used to target insider trading on Wall Street, allegedly netted $20 million in illegal profits, according to the Manhattan U.S. Attorney's office.

Moffat and five other people are facing charges stemming from the investigation, which was spearheaded by the Federal Bureau of Investigation. The other defendants include Rajiv Goel, a director in strategic investments at Intel; Raj Rajaratnam, managing member of Galleon Management; Danielle Chiesi of New Castle Funds; Mark Kurland, an executive at New Castle Funds; and Anil Kumar, a director at McKinsey & Co.

Moffat allegedly provided inside information on IBM, Sun Microsystems and AMD to Chiesi, an employee at New Castle Funds, formerly the equity hedge group of Bear Stearns.

Ruiz, meanwhile, has been identified by The Wall Street Journal as the unnamed "AMD Executive" cited in criminal complaints filed against Moffat and the others.

IBM partners, who did not want to be identified, said they see Moffat's departure as a move in the right direction as IBM attempts to put the insider trading scandal behind it.

Partners also said they see Adkins' appointment as a positive step, particularly given what they saw as increased direct sales channel conflict that emerged on Moffat's watch. They said there has been a rise in formerly IBM-exclusive partners taking on other vendor lines.

"I don't think this change is a negative at all," said one IBM partner. "Adkins has historically been an advocate of the channel. One of the strengths of IBM is they have lots of very capable executives. Adkins is certainly one of those executives. I don't think they will skip a beat."

Likewise, one system builder said Ruiz's departure is unlikely to ruffle channel partners.

"I haven't heard any panic about it, it's more water cooler gossip at this point," said Cami Parks, director of marketing at Eastern Data, a Norcross, Ga.-based system builder, of the Ruiz resignation.