'These are bad facts for him': Intel CEO's $24 million stock sale before disclosing the chip flaw could trigger lawsuits, SEC inquiry

• Institutional investors are talking to plaintiffs lawyers about potentially filing suit against Intel over CEO Brian Krzanich's massive stock sale in November.
• Krzanich gained some $24 million by selling all the shares and options he was allowed to sell under a plan he put in place only the month before. His plan was put in place months after Intel was informed of a major security vulnerability in its chips.
• There's a good chance the stock sale will draw the attention of the Securities and Exchange Commission and could lead to an internal investigation by Intel's board, legal experts said.

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Intel CEO Brian Krzanich's massive stock sale last fall - which came as the company was privately trying to contend with a major security vulnerability in its chips - could spark a mess of legal trouble for the company.
Institutional investors are already consulting with lawyers about filing a shareholder suit against the company related to the stock sale, according to a person familiar with the talks. Meanwhile, Intel could also contend with an inquiry by the Securities and Exchange Commission, legal experts said.
"I certainly think it would be intriguing to the SEC and theoretically to the US Attorney's office," said Joshua Robbins, a white-collar defense attorney at Greenberg Gross and a former federal prosecutor. If the SEC does launch an inquiry, he continued, "it's going to want to know what did [Krzanich] know and when did he know it."

The SEC declined to say whether it is investigating Krzanich's stock sale. An Intel representative told Business Insider last week that Krzanich's stock sale was "unrelated" to the high-profile security vulnerability which affects chips made by Intel as well as those of rival chipmakers AMD and ARM . But the Intel spokesperson declined on Monday to comment any further on the matter, including whether the company's board of directors is reviewing the stock transactions.

Krzanich saw a $24 million windfall in late November through a combination of exercising stock options and selling shares that he owned outright. The move raised eyebrows at the time, because he essentially sold all of the stock he could; he kept only the minimum 250,000 shares he's required to hold under his contract with Intel.

But the stock sale garnered new attention last week after Intel publicly acknowledged a security vulnerability that has plagued nearly all of its chips dating back to 1995. Intel said it had known about the vulnerability, which could allow a hacker to gain access to passwords and other secret information on a computer, since June - months before it came to the public's attention and months before Krzanich's stock sales.which could allow a hacker to gain access to passwords and other secret information on a computer, since June - months before it came to the public's attention and months before Krzanich's stock sales.

That timeline has raised questions about the motivation behind, the timing of, and the size of Krzanich's stock sale. Although Intel's CEO made the sales through a pre-arranged "10b5-1" plan that automatically sells shares on a set date, he didn't put that plan into place until the end of October, nearly five months after Intel first learned about the vulnerability.

"These are bad facts for him," said Mercer Bullard, a securities law professor at the University of Mississippi's School of Law.

The SEC has given executives wide latitude to sell their shares under trading plans - but maybe not this time