Busted: IBM Exec On Leave After Insider Trading Arrest

A top IBM Corp. (IBM) executive has been placed on leave as federal authorities continue to probe a hefty case of communications-industry insider trading.

Robert Moffat Jr., a senior vice president at IBM whose name has been thrown around as candidate for CEO, isn’t allowed to return to work for an undetermined amount of time now that he has been arrested for insider trading.

Government officials say Moffat shared confidential information about IBM and its partners with New Castle Funds’ Danielle Chiesi, another person arrested on Friday for what could be the largest insider trading case involving a U.S. hedge fund.

The feds accuse Moffat, Chiesi and Raj Rajaratnam, the billionaire founder of hedge fund Galleon Group, as well as three other people, of wrongfully using financial performance data to make well-timed trades and pocketing more than $25 million in profits.

The timeline stretches from 2006-2009, the government says. Rajaratnam, Moffat and Chiesi, along with Mark Curland, another New Castle Funds associate, Anil Kumar, a director at consulting firm McKinsey & Co., and Rajiv Goel, an exec in Intel’s treasury department, all are accused of making illegal trades on Advanced Micro Devices, Akamai, Clearwire Corp., Google Inc., Hilton, Polycom and Sun Microsystems, among other companies.

The six were caught after the government wiretapped their phone lines.