Under terms of the settlement, Raza did not admit nor deny allegations that he unlawfully netted nearly $1.5 million by trading on confidential company information.

Raza was also barred from serving as an officer or director of a public company for five years, and he was permanently enjoined from future violations of the federal securities laws.

Raza Microelectronics said late Tuesday that Raza resigned as company chairman effective Jan. 17, two months after he stepped down as CEO. A spokesman said Raza's settlement would not have "any impact as the company moves forward."

Raza Microelectronics' Web site stated Tuesday that Raza was also serving as a director at AMI Semiconductor, Mellanox Technologies (MLNX), eASIC and MetaRAM.

Officials at Raza Microelectronics, which makes chips for telecommunications switches and network routers, were not immediately available to comment on the settlement.

The SEC alleged that Raza in September 2006 was informed by OrthoClear's CEO that the company had agreed to cease competing with rival Align Technology Inc. (ALGN), of Santa Clara, Calif. The agreement, which effectively put OrthoClear out of business, followed a long-running intellectual property rights dispute between the transparent teeth-aligner market competitors.

Raza within two days of learning about the settlement began making large purchases of Align call options - which would increase in value if the company's share price rose - before the litigation settlement agreement became public, the commission said.

When the OrthoClear settlement was publicly announced several days later, the price of Align stock shot up 48% and Raza netted a profit of $1,450,900.

Raza agreed to pay a total of $2,977,842, including repaying his $1,450,900 in trading profits, $76,042 in prejudgment interest and a civil penalty of $1,450, 900, the SEC said.

Raza was at one point expected to become chief executive at AMD. He resigned from the No. 2 spot in 1999, citing personal reasons, but his departure followed big losses suffered during a price war with rival Intel Corp. (INTC).