| SANTA ANA, California, June 5
SANTA ANA, California, June 5 A former
technology chief executive's attorney urged jurors on Thursday
to reject claims by the U.S. securities regulators that his
client traded on inside information in a scheme that enabled the
man and his brother to reap about $260 million.
The Securities and Exchange Commission "ignored actual
evidence" that failed to support its case of wrongdoing against
former sTec Inc CEO Manouchehr Moshayedi, defense attorney
Patrick Gibbs said during closing arguments in a trial in U.S.
District Court in Santa Ana, California.
"The SEC's story consists of plucking words and phrases from
emails and testimony and stringing together little snippets and
phrases," Gibbs said.
But John Berry, an SEC attorney, told jurors that Moshayedi
traded in a secondary offering of sTec's stock in 2009 while
knowing a key customer's demand for a major flash memory product
was less than expected.
He could have called off the offering once he had the
non-public information, Berry said, but he "buried" the facts
through a secret side deal.
"They were all lies to cover up the truth about what he knew
that day," Berry said.
The end of the massive insider trading trial comes amid a
push by SEC Chair Mary Jo White to strengthen enforcement and
take more cases to trial.
It is the first SEC trial to go to a jury after the
regulator suffered a loss in May, when jurors in New York
cleared Nelson Obus, a fund manager at Wynnefield Capital Inc,
and two others, of insider trading.
Filed in 2012, the case against Moshayedi centered on his
plans to sell a large block of his stock holdings and those of
his brother, Mark Moshayedi, who co-founded the
The offering was to coincide with sTec's second-quarter
results and next-quarter guidance in August 2009.
The SEC said that before the offering, Moshayedi learned
that demand from EMC Corp, sTec's largest customer, for
its flash memory drive would be below expectations. EMC also
told him it would not renew a $120 million supply contract, the
Berry told jurors Moshayedi then persuaded EMC to buy more
flash drives than it needed in the third quarter for an
undisclosed discount the next quarter.
"He was laser-focused on making sure that guidance number
was high enough," Berry said.
By the time investors learned the truth, Moshayedi and his
family had made $260 million, he said.
But Gibbs argued the risk EMC might carry inventory was
"You can't ignore facts and evidence and wish them away," he
The SEC also investigated sTec and Mark Moshayedi but told
both in 2012 it would not bring a case against them. Western
Digital Corp acquired sTec last year for $340 million.
Jury deliberations are expected to begin on Friday.
The case is Securities and Exchange Commission v. Moshayedi,
U.S. District Court, Central District of California, No.
(Additional reporting by Nate Raymond in New York; Editing by
Noeleen Walder and Jonathan Oatis)