Intel Faces First Shareholder Suit on Spectre, CEO Stock Sale

Intel faces what appears to be its first shareholder suit in response to CEO Brian Krzanich’s stock sales and the subsequent revelation of the Spectre and Meltdown chip flaws.

Intel Corp. didn’t disclose design flaws that made its chips vulnerable to hacking, according to a Jan. 10 complaint filed in the U.S. District Court for the Central District of California. Krzanich allegedly dumped half his Intel stock after learning of the flaws but before disclosing the problems to shareholders.

According to financial filings, Krzanich Nov. 29 exercised and sold 644,135 options and sold an additional 245,743 shares that he already owned.

Sens. Jack Reed (D-R.I.) and John Kennedy (R-La.), both members of the Banking Committee, have asked the Securities and Exchange Commission and Justice Department to investigate the circumstances surrounding Krzanich’s stock sale. Intel previously said Krzanich’s sales were prearranged and unrelated to the chip flaws.

Intel representatives didn’t immediately respond to a request for comment. Consumers have filed several suits against Intel related to the chip flaws.

The case is Alvira v. Intel Corp. , C.D. Cal., No. 2:18-cv-00223, complaint filed 1/10/18 .

To contact the reporter on this story: Jennifer Bennett in Washington at jbennett@bloomberglaw.com

To contact the editor responsible for this story: Seth Stern at sstern@bloomberglaw.com