Remember Galleon Group? It used to be a $3.7 billion hedge fund before its manager, Raj Rajaratnam, was accused of using inside information to trade stocks (he's now out on $100 million bail). One of the alleged inside trades was a bet on a spike in the stock of Advanced Micro Devices (AMD) following a 2008 spin-off. Advance news of that deal allegedly reached Rajaratnam through Danielle Chiese, a portfolio manager at New Castle Funds, who heard it from -- wait for it -- AMD's CEO at the time, Hector Ruiz.
This is a surprising turn of events. Sure, CEOs have better information than anyone else, and it wouldn't shock me that some are flawed enough to trade on this information -- but it's rare for them to get caught. And yet, the Wall Street Journal reports that Ruiz alerted Chiesi to that spin-off (Ruiz hasn't been charged with any violation).