After Charges, IBM Puts Executive in Question on Leave

IBM (News - Alert) Corp., a leading United States technology firm, is taking full action towards a top company executive after he was charged with an insider trading scandal recently.

The executive, Robert Moffat, who allegedly leaked secrets about IBM’s earnings and financial dealings with corporate partners, was put on leave by IBM in efforts to take charge in the current situation.

According to IBM officials, Moffat, a senior vice president, who was considered a top candidate to succeed CEO Sam Palmisano, is no longer an officer at the company. 

The current senior vice president in charge of development and manufacturing, Rodney Adkins, has been rumored to assume Moffat’s position on an acting basis. If followed through, Adkins would assume managerial oversight over IBM’s mainframes and computer servers. 

In regards to the case, Raj Rajaratnam of Galleon Management, a privately-owned hedge fund sponsor, was charged of insider trading fraud along with co-conspirators, of which Moffat was apprehended along with other accomplices. 

Rajaratnam is also accused of conspiring with Rajiv Goel, director of strategic investment at Intel's (News - Alert) investment arm, and Anil Kumar, a director of powerful management consulting firm McKinsey & Co.

On Oct. 16, Moffat, who is also head of IBM’s systems and technology group, was named as a defendant. Executives as Intel Corp. and management consulting firm McKinsey & Co. were also rumored to be involved on the case. 

Moffat is also accused of passing on information on IBM itself ahead of the company's quarterly results, as well as those of Sun Microsystems (News - Alert) while IBM was looking at its books for a possible acquisition. 

With insider information supposedly leaked, executives have the ability to predict market trends. 

The charges, stemming from wiretaps, included accusations that Moffat passed on to hedge fund New Castle Group insider information on Advanced Micro Devices (News - Alert) Inc, obtained through IBM's business negotiations with the company.

This controversial news comes just shy of IBM’s recent quarterly earnings announcement, which exceeded expectations but failed to impress investors as a result of a drop in service contracts accrued, foreshadowing into a possible rocky future for the company.