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Xbox engineers in insider trading scandal
Company email tipped them off for get-rich-quick scheme...

By Julian Goldsmith

Published: Tuesday 20 November 2001

Scarcely has Microsoft's new Xbox games console been launched than it is tainted with the whiff of malpractice.

This time it is not the software giant itself but one of its partners in the project which is under investigation.

Silicon Valley-based graphics chipmaker Nvidia is being probed by the Securities and Exchange Commission, and 15 people connected to the company have been charged with insider dealing.

Nine engineers, a human resources executive, four friends and relatives and an analyst seconded to the company have been accused of raking in $1.7m on the back of discovering Nvidia had won a contract to supply the Xbox with graphics chips before it was made public on 10 March.

The SEC has said two of the miscreants have settled by returning the money they made on the deal, without admitting or denying wrongdoing.

Nvidia has suspended all 11 employees pending the investigation.

However, even though no high-level Nvidia executives were involved in insider trading, the company itself has to share some of the blame as the 15 defendants acted on information which was freely distributed by company-wide email.

Speaking to the Wall Street Journal, an Nvidia spokesman praised his company's open culture but said it is considering an education programme to make employees aware of the dangers of insider trading.