STEC Complaint FILED 10 25 12.pdf
Defendants to the extent that their violation of the federal securities laws has led to
investors who purchased the Company’s stock between June 16, 2009 and
February 23, 2010 (the “Relevant Period”) to sue STEC for their damages, causing
the Company substantial defense and reputational expenses as well as the eventual
cost of resolving such claims as well as related expenses caused by the SEC’s
investigations of the Company and the Moshayedis.
devices for computer systems. STEC’s customers included original equipment
manufacturers (“OEMs”) such as EMC, IBM, Hitachi, Hewlett-Packard (“HP”)
and Sun Microsystems (“Sun”), who, in turn, manufactured high performance
storage and server systems for large enterprises.
During the Relevant Period, STEC was a manufacturer of data storage
STEC claimed that it manufactured the industry’s most
comprehensive line of solid-state drives (“SSDs,” also known as “flash drives”). A
solid state drive is used for storing information in a computer system. Whereas
older hard disk drive (“HDD”) technologies stored information on
electromechanical spinning disks, an SSD has no moving parts, but instead retains
information on static computer chips. Because SSDs have no moving parts, they
have certain performance advantages over HDDs; they are faster, more energy
efficient and have longer service lives. However, SSDs are significantly more
expensive than HDDs.
STEC’s flagship product, the ZeusIOPS, was, during the Relevant
Period, a high-performance SSD advertised by the Company as being able to
access stored data at much faster speeds than both HDDS and other SSDs, due to
the Company’s proprietary architecture.
The Company was founded by the three Moshayedi brothers in 1990.
Thereafter, the Moshayedis continued as STEC senior officers and directors. At all
relevant times, Defendant Manouchehr was STEC’s Chief Executive Officer
(“CEO”) and Chairman of the Company’s Board of Directors. At all relevant