Feeds

CEO of fallen flash sweetheart STEC charged with insider trading

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

Maximizing your infrastructure through virtualization

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." ®

The Power of One eBook: Top reasons to choose HP BladeSystem

More from The Register

next story
Sysadmin Day 2014: Quick, there's still time to get the beers in
He walked over the broken glass, killed the thugs... and er... reconnected the cables*
Auntie remains MYSTIFIED by that weekend BBC iPlayer and website outage
Still doing 'forensics' on the caching layer – Beeb digi wonk
SHOCK and AWS: The fall of Amazon's deflationary cloud
Just as Jeff Bezos did to books and CDs, Amazon's rivals are now doing to it
BlackBerry: Toss the server, mate... BES is in the CLOUD now
BlackBerry Enterprise Services takes aim at SMEs - but there's a catch
The triumph of VVOL: Everyone's jumping into bed with VMware
'Bandwagon'? Yes, we're on it and so what, say big dogs
Carbon tax repeal won't see data centre operators cut prices
Rackspace says electricity isn't a major cost, Equinix promises 'no levy'
prev story

Whitepapers

Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Consolidation: The Foundation for IT Business Transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.
Application security programs and practises
Follow a few strategies and your organization can gain the full benefits of open source and the cloud without compromising the security of your applications.
How modern custom applications can spur business growth
Learn how to create, deploy and manage custom applications without consuming or expanding the need for scarce, expensive IT resources.
Securing Web Applications Made Simple and Scalable
Learn how automated security testing can provide a simple and scalable way to protect your web applications.