Judge sentences ex-IBM exec to 6 months prison

NEW YORK (Reuters) - Robert Moffat, a former IBM (IBM.NY)Corp senior executive whose extra-marital affair with a trader ensnared him in the Galleon hedge fund insider trading probe, was sentenced on Monday to six months imprisonment and a $50,000 fine.

Moffat pleaded guilty in March to securities fraud and conspiracy in connection with tips he passed on about IBM's business dealings to Danielle Chiesi of New Castle hedge funds.

Manhattan federal court judge Deborah Batts, in imposing the sentence on Moffat, said he had committed "an outstanding breach of fiduciary duty" to IBM by tipping Chiesi.

Batts told a tearful Moffat, who was accompanied by his lawyers, wife, children and friends, that "white collar crime is just as destructive to the social fabric as drugs and violence."

She also ordered him to serve two years of supervised release at the end of his prison term.

Moffat did not trade on information and did not make any money, his lawyers said.

Moffat's more than three-decade-long career at IBM was left in ruins after his arrest in October 2009 for what U.S. prosecutors said was a minor role in the purported scheme. He was once considered a candidate to become IBM's chief executive.

He had an affair with Chiesi and gave her tips in August and September 2008, according to court records. The information involved IBM's licensing of a deal involving Advanced Micro Devices Inc , details of IBM server sales and also earnings information about Lenovo Group Ltd <0992.HK> while he was a nonvoting board member.

Chiesi has pleaded not guilty to charges related to insider trading and is scheduled to stand trial with Galleon founder Raj Rajaratnam in January.

Rajaratnam has also pleaded not guilty in a case U.S. prosecutors describe as the biggest probe of insider trading at hedge funds in the United States.

"I made terrible mistakes in judgment that will haunt me for the rest of my life," Moffat said in court on Monday.

The judge ordered him to begin serving his prison sentence on June 30, 2011.

Of the 21 defendants criminally or civilly charged following arrests on October 16 and November 5 2009, 12 have pleaded guilty, eight not guilty, and one is at large.

The case is USA v Moffat, U.S. District Court for the Southern District of New York, No. 10-00270.

(Reporting by Grant McCool; Editing by Tim Dobbyn)

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