Ex-IBMer Moffat Denies Insider Trading Charges

Moffat, formerly head of IBM's $5.4 billion annual hardware business, denied insider trading charges and asked the U.S. District Court for the Southern District of New York to dismiss civil charges against him alleged by the U.S. Securities and Exchange Commission.

Moffat "denies that he provided material nonpublic information" on IBM, Sun Microsystems and Advanced Micro Devices, his lawyers said in court documents filed Wednesday, according to Reuters.

Moffat was arrested on civil and criminal charges in October for passing on insider information to Chiesi at hedge fund New Castle Ventures in a case that also involves another hedge fund, Galleon Management, run by billionaire Raj Rajaratnam.

Two weeks after the charges were levied, IBM said Moffat was no longer an employee.

Moffat was part of the IBM team that pursued an acquisition of Sun. Agents from the Federal Bureau of Investigation accuse Moffat of taking information he gleaned while poring over Sun's financial records and sharing it with Chiesi, who then allegedly traded on the inside information.

For example, the allegations say after IBM and Sun entered into a confidentiality agreement, Moffat contacted Chiesi at home "and had several conversations with her over the next several days," according to the SEC's civil complaint, which relies on wiretapped conversations and phone records among its evidence. "In the course of one or more of these conversations, Moffat provided Chiesi with material nonpublic information concerning Sun's (second quarter) 2009 earnings."

The SEC's civil complaint seeks to bar Moffat from ever again working as an officer of a publicly traded company.

The information gleaned from Moffat and at least 14 other defendants for six funds was used to generate $25 million in illegal profits, according to the SEC. Five others reportedly have pleaded guilty and are cooperating with investigators, according to Reuters.