Feeds

CEO of fallen flash sweetheart STEC charged with insider trading

SEC alleges boss made $134m in 'fraudulent' deal

High performance access to file storage

US financial watchdog SEC has charged STEC CEO Manouch Moshayedi with insider trading. The agency alleged the flash guru exploited confidential information to make some money in a secondary offering of STEC shares.

The SEC alleged:

Moshayedi learned critical nonpublic information that was likely to have a detrimental impact on the stock price... Moshayedi did not call off the offering and abstain from selling his shares once he possessed the negative information ... Instead, he... proceeded with the sale of 9 million shares from which he and his brother reaped gross proceeds of approximately $134 million each.

STEC was once the flash memory industry's darling, selling its Zeus solid-state disks (SSDs) to EMC, IBM and others as fast hard drive replacements in their data arrays.

But other vendors came in with cheaper multi-level cell (MLC) flash products and STEC lost the round. At one time it was valued at almost $2bn, but it's now worth a more modest $352m as it builds out its product line of SSD and PCIe flash card products for enterprises.

Stifel Nicolaus analyst Aaron Rakers said the SEC investigation probed events surrounding STEC's $120m EMC supply deal in the second half of 2009, when STEC made a secondary share offering.

The SEC claimed Moshayedi knew more than the public about EMC's declining purchases of STEC's flash gear, and that this would lower the STEC share price, and alleged that he traded shares based on this information.

In its civil, not criminal action, the SEC asked the court [PDF] for an injunction against Moshayedi forbidding him from breaking federal securities laws as well as what it refers to as a "disgorgement of ill-gotten gains", plus pre-judgment interest; a fine; and a bar on Moshayedi being an officer or director of any public company.

As Moshayedi is also STEC's chairman, the company's lead independent director, Kevin Daly, issued a canned statement: "With the conclusion of the [SEC] investigation, we remain confident that an independent trier of fact will find that the commission's allegations against Manouch Moshayedi, our chief executive officer, are without merit." ®

High performance access to file storage

More from The Register

next story
Seagate brings out 6TB HDD, did not need NO STEENKIN' SHINGLES
Or helium filling either, according to reports
European Court of Justice rips up Data Retention Directive
Rules 'interfering' measure to be 'invalid'
Dropbox defends fantastically badly timed Condoleezza Rice appointment
'Nothing is going to change with Dr. Rice's appointment,' file sharer promises
Cisco reps flog Whiptail's Invicta arrays against EMC and Pure
Storage reseller report reveals who's selling what
Just what could be inside Dropbox's new 'Home For Life'?
Biz apps, messaging, photos, email, more storage – sorry, did you think there would be cake?
IT bods: How long does it take YOU to train up on new tech?
I'll leave my arrays to do the hard work, if you don't mind
Amazon reveals its Google-killing 'R3' server instances
A mega-memory instance that never forgets
USA opposes 'Schengen cloud' Eurocentric routing plan
All routes should transit America, apparently
prev story

Whitepapers

Mainstay ROI - Does application security pay?
In this whitepaper learn how you and your enterprise might benefit from better software security.
Five 3D headsets to be won!
We were so impressed by the Durovis Dive headset we’ve asked the company to give some away to Reg readers.
3 Big data security analytics techniques
Applying these Big Data security analytics techniques can help you make your business safer by detecting attacks early, before significant damage is done.
The benefits of software based PBX
Why you should break free from your proprietary PBX and how to leverage your existing server hardware.
Mobile application security study
Download this report to see the alarming realities regarding the sheer number of applications vulnerable to attack, as well as the most common and easily addressable vulnerability errors.