STEC auditor Pricewaterhouse resigns, shares down
(Reuters) - Shares of solid-state drive maker STEC Inc STEC.O fell as much as 8 percent on Wednesday after the company said auditor PricewaterhouseCoopers LLP (PwC) had resigned.
STEC said in a regulatory filing late on Tuesday that there were no disagreements between the company and PwC on any matter of accounting principles or practices.
The filing included a letter from PwC saying it agreed with STEC's statements. PwC declined to comment further.
Analysts said the breakup could be fallout from an insider trading charge against STEC Chief Executive Manouch Moshayedi.
"I certainly have never seen a situation in which an auditor resigned and specifically said they had no accounting or other disagreements with the company," Craig Hallum analyst Richard Shannon told Reuters.
PwC may have decided from a branding and risk-reward perspective that it just wasn't worth keeping STEC as a client, Shannon said.
Benchmark Co analyst Gary Mobley also said PwC may have simply decided that the situation at STEC was "too messy" but added that PwC dropped hundreds of clients a year for reasons ranging from a lack of profitability for PwC to dissatisfaction with how PwC personnel are being treated.
"According to a brief conversation we had with management, STEC was not given a reason why PwC resigned," Mobley said in a client note.
"Management, first and foremost, wanted to clarify that PwC did not resign because of irregularities or material matters in STEC's financials," he said.
The U.S. Securities and Exchange Commission filed a civil complaint in July against Moshayedi for insider trading after he sold a significant portion of his holdings and shares owned by his brother, who is also a company co-founder.
The company disclosed in 2009 that the SEC was conducting a formal investigation involving trading in the company's securities.
Shares of STEC, which reported a 51 percent fall in revenue last month, were down 5 percent at $7.12 on the Nasdaq on Wednesday afternoon.
(Reporting by Sruthi Ramakrishnan in Bangalore; Editing by Don Sebastian)
- Police seek motive in fatal Washington state school shooting
- Wall St. finally turning on Amazon as Bezos magic fades
- Two deputies killed, two others hurt in California shooting spree
- Easter Island's ancient inhabitants weren't so lonely after all
- Two killed, four wounded in Washington state school shooting