Security Flaws In Your Computer Chip Leaves You Vulnerable

The security flaws are in the chips, which is every computer known to mankind. These chips are a bandwidth, or a bridge for hackers to come in and get information out of your computer. Ring of Fire’s Mike Papantonio and Peter Mougey discuss this issue.

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This Intel story gets weirder and weirder. Okay. You got 32, you got 32 class actions filed against Intel and what it's about in addition to that, there's a derivative suite that I'd like to talk about.

[crosstalk 00:00:16] securities.

Yeah. So, here you got, you've got security flaws. Talk about the story. Lay it out a little bit.

The security flaws are in the chips, which is every computer known to mankind. I don't care what you own, whether it's Intel, Advanced Micro Devices, Arm Holding, every one of those contains these chips. These chips are a bandwidth or a bridge to, for hackers to come in and get information out of your computer. So, then, Intel says, "Well, I gotta fix." So, they put a, kind of a bandage over the bridge so hackers can get in and steal the information, but that slows down the computer.

Well, if you just spent a couple grand on a computer-

Is it significant?

Oh, yeah, it's slow, it slows the whole thing down.

Okay.

Enough to warrant 32 suits. So, you buy a computer, it slows it down, you have people getting their information hacked. So, you have, as you mentioned, you have 32 lawsuits that fit into three categories. One is, I bought my computer and it's significantly slow or with the fix than what was advertised. I didn't get what you sold me. That's one.

Number two is the derivative suit, which the derivative suit is the company essentially suing the officer and directors-

Stockholders.

Right.

Stockholders.

So, it's a derivative with the company stockholders suing the officers and directors for making terrible business decisions.

And, the third one is the securities suit, what I love, which means that they knew about, the company knew about it, didn't disclose it. So, people that bought stock paid inflated. But, here's what I love. The CEO, I'm not gonna pronounce his last name correctly, Brian-

Krzanich.

Zrzanich. He sold 889,000 shares on November as part of his plan. He made 39 million dollars-

Oh, yeah. But, he knows it's coming.

-for selling his securities while he knows this is all under way.

He knows it's coming.

Yeah. He knew as of July 27.

Okay.

Months before.

So, here big Brian Krzanich, he says, "Wow! I gotta keep this quiet. While I keep it quiet, I'm going to go ahead and sell stock and I'm gonna make 39 million dollars."

Well, okay. Who got hit ... To understand, you handle derivative suits, you've handled them for years, a derivative suit is when the shareholder says that the conduct of management is so bad or it's so corrupt-

You've ruined my-

-you've ruined the value of my stock, right? Okay. So, what could have ... So, this guy knows that his stock is gonna tank if he doesn't secretly go do this as quickly as he can and if this information gets out then he's not gonna make 39 million dollars.

This whole compensation system is what's wrong with Wall Street and corporate America. We pay our CEO's, in large part, most of their compensation comes from options in stocks, which means I'm gonna give you stock that you can execute and buy a year or two down the line and the thought is their goal [inaudible 00:03:05] with the company. Get the stock price up. But, what it really ends up is, at any means possible drive the stock price up as much as humanly possible-

And sell it.

-keep the bad news quiet while I sell my ... Exercise my options and then liquidate. So, what he's done is he's ... And, he's saying, "Aw, this is just part of a regular plan."

He said it was coincidence. It was just a coincidence. I didn't know anything about all this.

But, you know what? If you know something bad's coming, you can't sell your ... I mean, 39 million dollars, which is more money than 99.99% of the population's ever gonna dream about making in a lifetime. He sold, in one liquidation, and pocketed all the while knowing that his shareholders were about to get crushed and he sold it.