Hector Ruiz, the ex-CEO of AMD and Chairman of Glboalfoundries, today announced that he will be taking a “voluntary leave of absence” and will officially step down from Globalfoundries in January 2010. This comes amid speculation that he was involved in tipping off a hedge fund with insider secrets about the upcoming spin-off of AMD’s fab plants into Globalfoundries with investments from the Abu Dubai government. Despite the hedge fund not profiting significantly – due to the deteriorating economy – this raises some important questions about insider secrets in Silicon Valley.
There is no place in the world that comes close to Silicon Valley, not even Boston. This is the world’s epicenter where the smartest computer scientists gather with the world’s sharpest businessmen and lawyers to form the titans of technology. As a result, many people are involved in closed door secrets, from the “lowly” engineer designing the next iteration of the iPod to the lawyer negotiating a merger agreement to the accountant preparing stock option grants. What makes Silicon Valley unique is that secrets, whether trade or intellectual property, is where the value of a company is built. Imagine Google in the early days with their search algorithm leaked, they’d be nothing today. As a result, all professionals agree to sign NDA (Non-Disclosure Agreements) upon hire, but even the temptation of money can overpower their moral sense of judgment.
I’m quite surprised that someone like Hector would fall victim to such a rookie mistake. Even engineers at Apple know disclosing company secrets are a big no-no and that’s why you hardly hear about Apple’s upcoming product line up. Hector, I hope you find a good lawyer; you’ll need it.
Some parting thoughts:
- Where does one draw the line of hyping a product (by sharing a few photos with a tech blog) and disclosing company secrets?
- How come the SEC isn’t going after those that leak company products? What’s the difference?
- Is sharing information about a spin-off of fab plants more damaging than the next Andriod features?