Timing of $24M stock sale by Intel CEO draws fire

Two U.S. lawmakers are calling for an investigation into whether Intel’s CEO, Brian Krzanich, improperly sold company stock after learning of a serious security flaw in the tech giants’ microchips but before it was publicly disclosed.

Intel sent the technology industry scrambling this month when it announced that the microchips powering nearly every computer and smartphone have for years carried fundamental flaws that can be exploited by hackers. The flaws, dubbed Meltdown and Spectre, flow from designs that allowed computers to operate more quickly and efficiently.

Now some lawmakers are questioning a large stock sale by the company’s chief executive late last year that was made before the news was made public, sending the company’s stock price down.

“This is exactly the type of report of suspicious trading that the SEC routinely investigates as well as the DO J,” said Brandon Garrett, a professor at the University of Virginia School of Law.

Intel learned of the security flaw in June. In November, Krzanich exercised and sold nearly 900,000 Intel shares and stock options, making about $24 million, according to Securities and Exchange Commission filings. The sale reduced Krzanich’s holdings in company stock by 50 percent to the minimum number of shares he’s required to own, according to Intel corporate policy.

Sens. Jack Reed, D-R.I., and John Kennedy, R-La., have requested that the SEC and the Justice Department investigate the stock sale. The sale raises “concerns of potential insider trading,” they said in a letter to the agencies.

Intel, which has said there was nothing improper in Krzanich’s stock sale, said it was aware of the letter. “We will cooperate fully with any governmental inquiries or investigations,” the company said in a statement.