SEC Clears STEC, Moshayedi BrotherThursday, July 26, 2012
The Securities and Exchange Commission has cleared STEC Inc. and its cofounder and director Mehrdad “Mark” Moshayedi of any wrongdoing related to an insider trading investigation.
The SEC, in two letters dated July 19, informed the Santa Ana-based company and Mark Moshayedi that it “does not intend to recommend any enforcement action.”
Mark Moshayedi is the company’s president, chief operating officer and chief technology officer.
The federal regulator did not lift insider trading charges against his brother, STEC Chairman and Chief Executive Manouchehr Moshayedi. The charges again him carry a potential lifetime ban from serving as an officer or director of any publicly traded company.
The SEC has charged Manouchehr Moshayedi with violating anti-fraud provisions of U.S. securities laws, and seeks a final judgment ordering him to relinquish any trading profits, pay prejudgment interest and financial penalties, and be permanently barred from serving as an officer and director of any registered public company.
The civil charges, filed July 20 in U.S. District Court in the Central District of California, allege Manouchehr Moshayedi withheld “critical nonpublic information” that was likely to negatively affect the Santa Ana-based company’s stock price and a secondary offering that was set to coincide with its second quarter financial results and its third-quarter revenue guidance in 2009.
The SEC alleged he did not call off the offering or abstain from selling his shares once he had the information. He instead engaged in a fraudulent scheme to hide the “truth” through a secret side deal, the SEC said, selling 9 million shares.
The Moshayedis each made $134 million from the sale, according to the SEC.
The SEC contends that Manouchehr Moshayedi entered into a secret deal with its largest customer Hopkinton, Mass.-based EMC Corp., to meet third quarter revenue expectations, and failed to disclose that EMC would not make any other additional purchases with STEC after that order.
STEC makes flash memory drives for corporate data networks. The products, known as solid state drives, use chips to store data.
The Business Journal first reported the SEC was considering a civil injunction action against the company and its CEO in August 2011.
Regulators began looking at the company in 2009 to determine if it violated federal securities laws by making false and misleading statements.