Seagate (STX) EAR Violation Case

N.D. California

Court

3:23-cv-03431-SI

Case number

15 Sept 2020

Class period Start

25 Oct 2022

Class period End

08 Sept 2023

Lead Plaintiff motion deadline

Seagate violated the EAR export regime.
$STX fell nearly 8%, damaging investors. 
Investors suspect Seagate of failing to disclose that it was in violation of the BIS export rules which resulted in an investigation by the U.S. Department of Commerce.
On October 26, 2022, Seagate (STX) disclosed that it received a Proposed Charging Letter from the BIS alleging that Seagate violated the EAR by providing Seagate HDDs to “a customer and its affiliates listed on the BIS Entity List between August 2020 and September 2021.”  

On this news, the $STX price fell nearly 8%, damaging investors.  Over the following three trading days, the price fell an additional nearly 7%.

EAR Entity List:
On May 16, 2019, Huawei and certain of its non-U.S. affiliates were added to the U.S. Department of Commerce Bureau of Industry and Security’s (“BIS”) Export Administration Regulations (“EAR”) Entity List (“Entity List”).  
The EAR Entity List is a list of names of certain foreign persons and entities that are subject to specific license requirements for the export, re-export, and/or transfer (in-country) of specified items. 
The Entity List designation was based on a determination made by multiple U.S. government agencies “that there is reasonable cause to believe that Huawei has been involved in activities contrary to the national security or foreign policy interests of the United States.”  
Then, on August 17, 2020, the BIS imposed export controls over certain foreign-produced items “to better address the continuing threat to U.S. national security and U.S. foreign policy interests posed by Huawei and its non-U.S. affiliates.”
Taking all facts into account, Investors have reasons to suspect Seagate and its Leaders of measling and failure to disclose that:
the nature and magnitude of Seagate’s HDD sales to Huawei, including that Seagate experienced a significant acceleration in sales to Huawei immediately after the BIS rules went into effect and Seagate’s competitors stopped selling to Huawei;
the underlying details of Seagate’s HDD manufacturing process, including the use of covered U.S. software and technology in “essential ‘production’” processes, rendered its sales to Huawei in violation of the BIS export rules 
Seagate was in blatant violation of the BIS export rules which resulted in an ongoing investigation by the U.S. Department of Commerce and exposed Seagate to hundreds of millions of dollars in fines and penalties. 

Case Status

Motion to dismiss

Alleged Offence

Misleading Statements,

Failure to Disclose,

Omissions

Suspected Party

Directors,

Management

Security Type

Stocks

Trade Direction

Long

Shock Event Date

26 October 2022

Filing date

10 July 2023

Lead Plaintiff Deadline

08 September 2023

Judge

Hon. Susan Illston

Seagate (STX) EAR Violation Case

Collecting participants…