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Ex-I.B.M. Executive Pleads Guilty in Galleon Insider Trading Case

A former I.B.M. senior executive pleaded guilty on Monday to providing confidential information about Advanced Micro Devices and Lenovo to a friend who was a hedge fund consultant and an alleged participant in a wide-ranging insider trading scheme.

Galleon Group
Galleon Group

The executive, Robert W. Moffat Jr., is the 11th individual to plead guilty in the case, which revolves around the Galleon Group hedge fund and its founder, Raj Rajaratnam.

In a half-hour hearing before Judge Frank Maas of federal magistrate court in Manhattan, Mr. Moffat, formerly a senior vice president of I.B.M.’s systems and technology group, pleaded guilty to one count each of conspiracy and securities fraud for his role in the scheme.

Unlike some other witnesses in the case, Mr. Moffat is not cooperating with the government, according to one of his lawyers, Kerry Lawrence.

Under federal sentencing guidelines, he faces up to six months in jail. A hearing is scheduled for July 26.

Mr. Moffat, at one time considered a candidate to succeed Samuel Palmisano as I.B.M.’s chief executive, was arrested in October along with Ms. Chiesi, Mr. Rajaratnam and four others. Of that initial group, only Ms. Chiesi and Mr. Rajaratnam have pleaded not guilty.

During Monday’s hearing, Mr. Moffat—who wore a charcoal pinstripe suit and gave brief answers to Judge Maas’s questions—admitted giving information between August and October of 2008 about a proposed reorganization of A.M.D. and lower-than-expected earnings of Lenovo to Danielle Chiesi, then a consultant at the hedge fund New Castle Funds.

“I knew the information I provided to Ms. Chiesi was material and nonpublic,” he said in a statement in court, his voice briefly wavering.

In a statement issued after the hearing, Mr. Lawrence emphasized that his client did not actually trade on any of the information disclosed to Ms. Chiesi and received no money for the illegal leaks.

“Mr. Moffat deeply regrets his conduct and is deeply sorry for the embarrassment his conduct has caused to his family and to his former employer, I.B.M.,” Mr. Lawrence said.