Moshayedi Steps Down as Chairman, CEO of STECWednesday, September 19, 2012
Manouch Moshayedi has resigned his positions as STEC Inc. chairman and chief executive as he fights a civil complaint for insider trading levied by the Securities and Exchange Commission.
He will remain with Santa Ana-based disk drive maker, with the title of founder, and continue to serve on its board, according to a regulatory filing Monday.
STEC’s board has elected Mark Moshayedi—Manouch’s brother, who serves as president, chief operating and technical officer, and as a director—to take the chief exexcutive’s post on an interim basis.
Kevin Daly, STEC’s lead independent director, was elected as interim chairman.
The changes are effective today.
The latest development comes in the wake of PricewaterhouseCoopers LLC’s resignation as the company’s independent auditor last week.
The New York-based accounting firm had been STEC’s auditor for more than two years.
Mark Moshayedi, 50, has served as director of STEC since March 1992. He took on the duties of chief operating officer and chief technical officer in 1995, and became president in March 2007. He led research and development at the company from June 1994 to December 1994.
Before that, he held various positions with STEC, including senior vice president and secretary, a post he held until March.
The company also disclosed that Mark Moshayedi has a one-third ownership stake in MDC Land Corp. and MDC Land LLC, which leases two buildings to STEC, including its headquarters.
The leases, set at $21,000 and $35,000 per month, are scheduled to expire in July 2017. The company said the leases are “no less favorable” than what could be obtained from an unaffiliated third party.
Manouch Moshayedi denied the SEC charges against him in a recent filing in U.S. District Court for the Central District of California.
The SEC has charged him 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 in mid July, allege he withheld “critical nonpublic information” that was likely to negatively affect the 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 alleges 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.
Manouch Moshayedi contends he was “unaware of any material information that had not been publicly disclosed at the time of the public offering,” according to a filing.
The Moshayedis made $267 million from the sale before expenses, according to investigators.
The SEC in July cleared STEC and Mark Moshayedi of any wrongdoing related to the insider trading investigation.
The SEC contends that Manouch 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.
STEC shares were up about 1% at the close of trading Tuesday to a market value of $333 million.