Intel Exec Allegedly Made $50K Through Insider Trading

Rajiv Goel, the Intel executive who is one of six defendants charged with conspiracy to commit securities fraud in a federal case stretching from Wall Street to Silicon Valley, allegedly helped co-defendant Raj Rajaratnam and his hedge fund profit to the tune of $579,000 from transactions involving Clearwire stock.

Goel, charged along with Galleon Management founder Rajaratnam and McKinsey & Co. director Anil Kumar in a complaint filed Friday by federal authorities, has been placed on administrative leave from his position as a director of strategic investments in Intel's Treasury department, according to an Intel spokesman.

In addition to Goel's alleged dealings with Rajaratnam on the Clearwire matter, the complaint alleges that Rajaratnam conducted trades of PeopleSupport stock on Goel's behalf that ultimately netted Goel $50,000 in profit in October 2008. Rajaratnam's PeopleSupport transactions were conducted, according to the complaint, with inside information about the pending acquisition of PeopleSupport by India's Essar Group, supplied to Rajaratnam by a Galleon Management employee who was on the PeopleSupport board of directors.

The 51-year-old Goel, a resident of Los Altos, Calif., is also a director on the board of Calgary, Alberta-based SMART Technologies, a digital display vendor, a spokesperson for SMART Technologies told Channelweb.com.

Three other individuals have been charged in a separate criminal complaint in New York -- Danielle Chiesi, portfolio manager at $1 billion hedge-fund firm New Castle Partners; Robert Moffat, a senior vice president at Armonk, N.Y.-based IBM; and Mark Kurland, a senior managing director and general partner at New Castle, a former equity hedge-fund group of Bear Stearns Asset Management.

Goel's first contact with Rajaratnam outlined in the complaint came on March 19, 2008. Based on a federal wiretap on Rajaratnam's cell phone, the complaint alleges that on that day Goel shared confidential information with Rajaratnam about the progress of a large, multi-party investment in the wireless Internet service provider Clearwire that involved Intel, Sprint and other companies.

The next day, Goel and Rajaratnam allegedly hashed out the value of Clearwire following the potential investment from Intel, Sprint and others, with Goel allegedly supplying inside information about the size of Intel's investment -- $1 billion -- and the total amount of cash Clearwire would soon have on hand -- $4.7 billion.

Later on March 20, Goel allegedly made another call to Rajaratnam with the information that Intel's board "approved this deal" the previous day. According to the complaint, Rajaratnam asked Goel if the Clearwire deal would happen on "April 1st, right?" to which Goel replied, "Yeah, but you know these deals. Don't hold me to that date because these deals, they're so complex and so many parties involved, they will all have their say right now."

Next: 'Tired' Of Working At Intel

Also during the second March 20 call, the complaint states that Goel told Rajaratnam that he was "tired" of working at Intel and asked Rajaratnam to get him a job with "one of your rich, powerful friends."

Goel placed another call to Rajaratnam's cell phone on March 24, according to the complaint, during which they allegedly discussed the Clearwire deal. Prior to that call, on March 21, Rajaratnam's Galleon Technology Funds purchased some 125,800 shares of Clearwire stock at share prices ranging from $10.95 to $11.74, according to the complaint. Galleon Technology Funds bought another 136,000 Clearwire shares at $12.04 per share on March 25.

On May 7, 2008, Clearwire announced that it would be combining its wireless broadband unit with Sprint Nextel's and that outside investors had put $3.2 billion into the company, including $1 billion from Intel.

But by the time of that announcement, Galleon Technology Funds had, over the course of three separate dates, already sold all but 800 of the 261,800 Clearwire shares purchased beginning on March 21, making a profit of approximately $579,000 on its two big share buys, according to the complaint.

Two of the sell-offs occurred after media reports about the Clearwire deal were published in late March, well ahead of the deal's eventual announcement, to which "the market for securities of Clearwire responded positively," according to the complaint. A final sell-off by Galleon Technology Funds happened three days after Goel allegedly called Rajaratnam with the news that there were "major bumps on the way" with regards to the Clearwire project.