The Securities & Exchange Commission this afternoon announced that it has charged solid-state drive maker Stec (STEC) CEO Manouchehr Moshayedi with violating insider trading rules in conjunction with a secondary offering of the company’s stock back in August of 2009.
The SEC said Moshayedi “sought to take advantage of a dramatically upward trend in the stock price of STEC Inc. by deciding to sell a significant portion of his stock holdings as well as shares owned by his brother, a company co-founder” based on knowledge of impending results that would affect the offering.
However, in the days leading up to the secondary offering, Moshayedi learned critical nonpublic information that was likely to have a detrimental impact on the stock price. Moshayedi did not call off the offering and abstain from selling his shares once he possessed the negative information unbeknownst to the investing public. Instead, he engaged in a fraudulent scheme to hide the truth through a secret side deal, and proceeded with the sale of 9 million shares from which he and his brother reaped gross proceeds of approximately $134 million each.