Report: Intel CEO’s $24 Million Stock Sale After Learning of CPU Bug Could Lead to Trouble

Intel CEO Brian Krzanich, who sold approximately $24 million in stocks and options after he learned of the Meltdown CPU bug, may face a lawsuit or other legal problems, according to legal experts.

Business Insider UK reports that Intel shareholders have begun consulting legal experts, questioning the legality of CEO Brian Krazanich’s decision to sell off $24 million in stock and options shortly after he learned of a massive bug that would affect all CPU’s produced by Intel and many other companies. Investors are reportedly considering filing a shareholder suit against Krzanich related to the sale of his stock according to sources with knowledge of the situation. But, legal experts have warned that Intel as a company could also face scrutiny from the Securities and Exchange Commission over the stock sale.

Joshua Robbins, a former federal prosecutor and white-collar defense attorney at Greenberg Gross stated, “I certainly think it would be intriguing to the SEC and theoretically to the US Attorney’s office,” he continued to say that if the SEC does launch an inquiry, “it’s going to want to know what did [Krzanich] know and when did he know it.” The SEC has not commented on whether or not they will be investigating Intel. An Intel spokesperson initially stated that Krzanich’s stock sale was “unrelated” to the public announcement of the CPU bug, but the company has since declined to comment on Krzanich’s actions.

The sale of Krzanich’s stock was done through a “10b5-1” plan which sells stocks automatically on a certain date, but while this plan was made before the public announcement of the CPU bug, Krzanich had been aware of the bug for some time when the plan was put in place. Mercer Bullard, a securities law professor at the University of Mississippi’s School of Law, commented on Krzanich’s current predicament saying, “These are bad facts for him.” Bullard added, “The first question is what is the board going to do, because the board will get to this faster than the SEC.”

Bloomberg also reported that security researchers have been investigating CPU bugs found in chips made by Intel and other manufacturers for some time and have published multiple papers outlining how dangerous such an exploit could be. Robert Bartlett, a professor of law at the University of California-Berkeley’s School of Law stated, “You lose a lot of protections if you amend a [trading] plan when in possession of material non-public information.” Ron Geffner, a partner at Sadis & Goldberg, and a former SEC enforcement attorney also believes that the SEC may be forced to investigate the case to some degree, “I would anticipate given the attention this may receive that the government would feel compelled to analyze the factual data,” said Geffner.