After learning of major security flaws in his company’s products, Intel CEO Brian Krzanich sold off tens of millions of dollars worth of company stock before the story was revealed to the public.
Security researchers at Google discovered the two microprocessor flaws, dubbed Spectre and Meltdown, back in June 2017, both of which open the door for hackers to steal sensitive information from PCs, smartphones, and the servers that help keep beloved internet services running. The Meltdown flaw affects 90 percent of microprocessors made by Intel, while Spectre affects practically all microprocessors on the marketplace.
The problem was kept under wraps for months in an attempt to stop hackers exploiting the flaws until a solution could be created. However, on Tuesday news of the flaw began to leak out through technology websites like The Register, putting tech companies in the uncomfortable position of having a problem without a quick and easy fix.
On Thursday, Axios reported that Krzanich had revised his company’s trading plan in October. This then allowed him to sell off $39 million worth of stock in November, leaving him with only the minimum amount of stocks that Intel requires its CEO to hold. A company spokeswoman said that Brian’s sale was “unrelated” and that it was “in-line with corporate guidelines.”
There is no suggestion, yet, that Kraznich was participating in insider trading. But while the Intel CEO may be following the letter of the law, personally enriching yourself by $40 million after discovering a fundamental flaw in your company’s product isn’t exactly a good look, especially as other shareholders suffer. This is especially true since other Intel stockholders had a nightmare on Wednesday, with more than $11 billion in shareholder value wiped out.
Intel is also facing at least three separate class-action lawsuits over the new security vulnerability. Apple, meanwhile, has said that its iPhones and computers are vulnerable to the processor flaws. There’s also concern that a repair patch for Meltdown could slow computers by up to 30 percent. Fixing the Spectre flaw, however, will require a fundamental redesign of the world’s microchips.
5. The second issue is a fundamental flaw in processor design approach, dubbed Spectre, which is more difficult to exploit, but affects virtually ALL PROCESSORS ON THE MARKET (Note here: Intel stock went down today but Spectre affects AMD and ARM too), and has NO FIX.
— Nicole Perlroth (@nicoleperlroth) January 3, 2018
Of course this isn’t the first time that wealthy CEOs have used the failures of their own companies to personally enrich themselves. In September, three wealthy executives at the credit monitoring firm Equifax sold more than $2 million worth of stock days before the company revealed a massive data breach which exposed the personal information of 143 million Americans — including social security numbers, addresses, names and, in some cases, credit card and driver’s license numbers — to hackers.
Like with Intel, an Equifax spokeswoman denied that the sale had anything to do with the upcoming revelations. Around a month after the revelations about the data breach were made public, the IRS awarded Equifax a $7.35 million no-bid contract to help prevent fraud.