Manouch Moshayedi resigned as chairman and chief executive of STEC Inc. as he fights a civil complaint for insider trading levied by the Securities and Exchange Commission.
Moshayedi will remain involved with the Santa Ana-based disk drive maker with the title of founder, and continue to serve on its board, according to a regulatory filing. STEC makes flash memory drives for corporate data networks.
STEC’s board elected Mark Moshayedi—Manouch’s brother, who serves as president, chief operating and technical officer, and sits on the board—to take the chief executive’s post on an interim basis. Kevin Daly, STEC’s lead independent director, was elected interim chairman.
The changes took effect Sept. 19.
The latest developments follow PricewaterhouseCoopers LLC’s recent resignation as the company’s independent auditor. 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.
In its filing, the company 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 and to pay prejudgment interest and financial penalties. It also seeks to bar him permanently 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 Moshayedis made $267 million from the sale before expenses, according to investigators. The SEC said it July that it wouldn’t be filing any charges against STEC or Mark Moshayedi.
—Chris Casacchia
