* SEC filed a civil complaint against Manouch Moshayedi in
* Co could be trying to isolate itself from lawsuit
liabilities - analyst
By Neha Alawadhi
Sept 18 Solid-state drive maker Stec Inc
said Manouch Moshayedi, its co-founder and chief
executive of 22 years, resigned after U.S. regulators filed
insider trading charges against him.
Mark Moshayedi, the departing CEO's brother, will take over
as interim CEO, Stec said in a regulatory filing. Manouch
Moshayedi will stay on the company's board.
The U.S. Securities and Exchange Commission said in July
that Manouch Moshayedi, who knew a major customer's demand was
below expectation, sold a significant part of his and his
brother's holdings while Stec's shares were gaining value.
The top executive's resignation could mean that the company
is trying to isolate itself from liabilities arising out of the
lawsuit, ThinkEquity LLC analyst Rajesh Ghai told Reuters.
"If Manouch is found guilty, then he will not be liable for
any damages, that is what the company is trying to do," he said.
Ghai also said it was possible that Stec's new auditor put a
condition that Manouch Moshayedi should not remain the CEO,
given the SEC lawsuit.
PricewaterhouseCoopers LLP resigned as the company's auditor
on Sept. 12. Analysts said the breakup could be a fallout of the
insider trading charges.
Manouch and Mark Moshayedi, also the company's chief
operating officer, co-founded Stec in 1990. They owned about 17
percent of its outstanding common stock as of Dec. 31, 2011,
according to the company's annual report.
Stec, which counts EMC Corp and IBM as
customers, disclosed in 2009 that the SEC was conducting a
formal investigation involving trading in the company's
Investors may consider the resignation as a "slight
positive," absolving Stec of any liabilities if 53-year-old
Manouch Moshayedi is found guilty, Ghai said.
The Santa Ana, California-based company also has an
insurance policy to absolve it of legal liability of about $15
to $20 million, he added.
Once a leader in the flash drive storage industry, Stec has
seen its sales plunge over the last year as larger players such
as Western Digital Corp and Seagate Plc have
eaten into its market share.
Flash drives, or solid-state drives, are increasingly being
used in devices ranging from high-performance servers to
personal computers and tablets because they are faster and more
power efficient than traditional hard disk drives.
The company's stock was unchanged at $7.08 on the Nasdaq in
morning trading on Tuesday.