Atiq Raza, a former president of AMD, agreed to pay nearly $3 million to settle insider
trading charges brought by the SEC related to knowledge he allegedly netted nearly $1.5 million using information gained as a director on the board of OrthoClear regarding the outcome of litigation with a competitor, according to a release from the SEC.
According to the Commissions complaint: “On the night of September 19 and the early morning of September 20,2006, OrthoClear’s CEO informed Raza about a confidential agreement that OrthoClear had reached with Align to resolve ongoing and contentious litigation between the two companies. As part of the settlement, OrthoClear agreed to no longer compete against Align in the transparent teeth-straightening market. On September 22, Raza purchased a large number of Align call options securities
that would increase significantly in value if Align’s stock price rose in the short term.
When Align announced the settlement with OrthoClear the following week, Align’s stock price rosenearly 50%, allowing Raza to realize profits of $1,450,900.”
“Mr. Raza, as a member of OrthoClear’s board of directors, was obligated to protect
confidential company information. Instead, he violated the trust of his company by using the confidential information for personal gain and, in doing so, he also undermined the level playing field of our capital markets,” said Marc J. Fagel, Co-Acting Regional Director of the Commission’s San Francisco Regional Office in a prepared statement.
Raza joined AMD in 1996 as chief technology officer when AMD acquired chip design firm NextGen, and with it the technology that made the AMD K-6 processor line a success. For a time he was being groomed to eventually become AMD’s chief executive to replace AMD founder Jerry Sanders. Raza left the company in 1999 to start a venture capital fund and founded Raza Microelectronics in 2002 to make communications chips.
Without admitting or denying the allegations, Raza agreed to a settlement under which he will pay nearly $3 million in disgorgement and penalties, be barred from serving as an officer or director of a public company for five years and be permanently enjoined from future violations of the federal securities laws.