Former AMD CEO Caught in Hedge Fund Scandal

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Hector Ruiz, the soft-spoken executive who rose to prominence as the chief executive officer of Advanced Micro Devices (s AMD), has been named by government prosecutors as a senior executive who allegedly gave inside information in the Galleon hedge fund scandal, according to The Wall Street Journal. An unnamed source told the Journal that Ruiz was the executive giving information to Danielle Chiesi, a Bear Stearns Asset Management official who was part of an insider trading group involving megabillion-dollar hedge fund manager the Galleon Group. Authorities had identified Chiesi’s source as “an AMD executive.”

Ruiz resigned from AMD last year and took over as the chairman of Globalfoundries, the chip manufacturing business that was spun out of AMD. Authorities have an “AMD executive” and Chiesi talking about the timing of the spin-off on the phone. Chiesi’s hedge fund, New Castle LLC, bought AMD shares ahead of the deal. And so did Galleon. (Related: The Rise and Fall of a Billionaire Technology Hedge Fund Guru.)

Ruiz hasn’t been charged of any wrongdoing in the case. The Wall Street Journal reports:

The U.S. doesn’t allege that the AMD executive identified as Mr. Ruiz traded for himself or received any money for passing along information. It isn’t clear what legal liability, if any, he could potentially face for the allegations described in the criminal complaint. Other executives named in the case who didn’t trade on the information or receive money for information were charged with conspiracy, and have denied wrongdoing. Court documents don’t indicate whether prosecutors or SEC officials are considering additional legal actions related to AMD. Representatives of the Manhattan U.S. Attorney’s office and the SEC declined to comment.

Ruiz is regarded as one of the few good guys — and among the most respected executives — in the chip business. In my dealings with him, he has always been great and straight up. Ruiz is a prototypical American success story. A Mexican immigrant, he went through some tough times to be a success. Bloomberg writes:

…he worked at Texas Instruments Inc. before moving to Motorola Inc., where he became the head of its semiconductor division. Jerry Sanders, who founded AMD in 1969, hired Ruiz in 2000 to groom him as a successor…Ruiz got bachelor’s and master’s degrees in electrical engineering from the University of Texas at Austin and a doctorate in engineering in 1973 from Rice University in Houston. He was born in Piedras Negras, Mexico, according to Rice’s Web site. He attended high school in the South Texas town of Eagle Pass. He walked forty-five minutes each way to school and graduated as valedictorian of his senior class, according to Rice’s biography of Ruiz.