STEC Complaint FILED 10 25 12.pdf


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Moshayedi (“Mark”)3 (the “Securities Fraud Defendants”), each of whom was a

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senior officer and/or director of STEC, Inc. (“STEC” or “the Company”). Plaintiff

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also brings claims derivatively, on behalf of the Company, against the Securities

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Fraud Defendants and the remainder of STEC’s Board of Directors and General

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Counsel during the period of the wrongdoing alleged herein including at the time

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the Board purportedly “investigated” Plaintiff’s pre-suit demands. Such derivative

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claims on behalf of STEC are based upon, inter alia, the breach of fiduciary duty,

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breach of duty of loyalty, violation of California Corporations Code §25402, waste

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of corporate assets, and unjust enrichment against all of the Securities Fraud

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Defendants, Trust Defendants and the remaining Individual Defendants.
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This action involves insider trading on a massive scale as part of a

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fraudulent scheme perpetrated by Defendants Manouchehr and Mark on behalf of

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themselves, their brother Mike and the Moshayedi family trusts to deceive the

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investing public by making materially false and misleading statements regarding

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the true financial and operating condition of STEC, and by intentionally concealing

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material facts concerning the Company’s violations of, inter alia, SEC rules and

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accounting principles, all of which caused STEC’s reported revenue and profits to

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be overstated artificially and by material amounts. The Company’s auditor,

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PriceWaterhouseCoopers, LLP (“PWC”), although not a defendant, added its

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imprimatur to the Company’s year-end financial statements when it knew or

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should have known that they were false and misleading.

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knowledge of the actual financial and operating condition of STEC as well as

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industry practices. Despite knowing that the Securities Fraud Defendants had

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manipulated the Company’s revenue recognition practices and had actual

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knowledge from “red flags” and specific facts at its disposal demonstrating that

Indeed, PWC had

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Defendants Manouchehr and Mark are sued herein individually, as agents and
representatives for their brother, Masoud Moshayedi (“Mike”) and three
Moshayedi family trusts, de facto controlled by the respective Moshayedi brothers.
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