An IBM executive has been arrested on insider trading charges, after he allegedly revealed details of the company’s plan to acquire Sun Microsystems – which it has since abandoned – to an investment analyst earlier this year.

According to the Securities Exchange Commission, Robert Moffat, vice president of IBM’s systems and technology group, provided Danielle Chiesi, a friend of his and an employee of private investment firm New Castle Partners, with information relating to Sun’s financial performance that had not been made public. He also gave Chiesi private information regarding chip manufacturer AMD, the SEC claims.

Chiesi used this information to make profitable investments on behalf of her employer, it is alleged. New Castle reportedly made $900,000 on the mooted IBM / Sun deal alone.

Also implicated in the affair are Rajiv Goel, director of strategic investments for Intel Capital, Anil Kumar, a director at business advisory McKinsey who has been dubbed “the godfather of knowledge process outsourcing” and Raj Rajaratnam, a billionaire hedge fund manager, as well as another employee of New Castle Partners.

Other technology stocks were involved in the group’s alleged insider trading ring, including Google, Akamai and Polycom.

According to reports, IBM’s Moffatt was once tipped as a successor to current CEO Sam Palmisano.