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Intel CEO Brian Krzanich. Photo by Horacio Villalobos /Getty Images

Intel CEO Brian Krzanich sold more than $39 million worth of company stock after Intel learned of a fundamental design flaw in its products, but before the general public was made aware.

Why it matters: The SEC may take a hard look at Krzanich's windfall, particularly the part where he changed the rules governing his stock sale schedule.

The timeline

June 4, 2015: Krzanich adopts a new Rule 10b5-1 trading plan. Such plans are regularly used by company executives to establish automated stock sale calendars, so as to eliminate accusations of insider trading.

April 22, 2016: Krzanich adopts a new Rule 10b5-1 trading plan.

February 10, 2017: Krzanich adopts a new Rule 10b5-1 trading plan.

June 2017: Google security researchers inform Intel and other large chipmakers of security vulnerabilities related to longstanding processor designs. Per Intel:

"The security researchers presented their findings in confidence, and we and other companies worked together to verify their results, develop and validate firmware and operating system updates for impacted technologies, and make them widely available as rapidly as possible."

October 30, 2017: Krzanich again changes the terms of his Rule 10b5-1 trading plan. The prior two changes had come after 10-month periods. This one came after an 8-month period.

November 29, 2017: Krzanich sells more than $39 million worth of Intel stock, in accordance with the revised trading plan adopted just weeks earlier. It represents the sale of all but 250,000 shares, which is the minimum amount that Intel requires Krzanich to hold.

January 3, 2018: Intel and other chipmakers publicly disclose the security flaw.

The explanation

An Intel spokeswoman says that Krzanich's October 2017 trading plan change and subsequent stock sale were "unrelated" to the chip design flaw, but declined to provide any alternate explanation.

Intel also says that it does not expect material financial impacts from the design flaw, although it remains too early to know for sure.

While Intel shares took a hit from yesterday's revelation, they continue to trade higher than where Krzanich sold last November. Such fluctuations, however, would be irrelevant to an insider trading investigation.

Bottom line: Executives are typically allowed to sell shares via automated trading programs even if they know of non-public material information, but that's much different from changing the terms of the program once in receipt of such knowledge. For Krzanich, the key could be whether regulators agree with Intel's contention that the design flaw is non-material.

Go deeper

Dan Primack, author of Pro Rata
1 hour ago - Economy & Business

Trump blocks banks from limiting loans to gun and oil companies

Illustration: Sarah Grillo/Axios

Big banks are no longer allowed to reject business loan applicants because of the industry in which they operate, according to a new rule finalized on Thursday by the Trump administration.

Why it matters: Wall Street has curtailed its exposure to industries like guns, oil and private prisons, driven by both public and shareholder pressures. This new rule could reverse that trend.

Former FDA commissioner: "Reliable drug supply is absolutely critical"

Axios' Caitlin Owens and former FDA commissioner Mark McClellan. Photo courtesy of Axios Events

Having a reliable supply of pharmaceutical drugs throughout America will be "absolutely critical" to boosting affordability in health care during the Biden administration, former Food and Drug Administration (FDA) commissioner Mark McClellan said at a virtual Axios Event on Friday.

The big picture: McClellan, who served under President George W. Bush, says drugs having limited supply and limited competition leads to elevated pricing. He considers drug supply to be a national security and public health issue.

Felix Salmon, author of Capital
4 hours ago - Economy & Business

Americans are still spending money

Source: Census Bureau; Chart: Axios Visuals

Americans spent more money at stores and restaurants in 2020 than they did in 2019 — even in the face of a devastating global pandemic that shut down broad sectors of the economy.

Why it matters: The monthly retail sales report this morning came in well below expectations, and showed consumer spending falling on a seasonally-adjusted basis. Total expenditures were still higher in December 2020 than they were a year previously, however.

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