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STX.US
id: 776

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:
  1. 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;
  2. 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 
  3. 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
Lead Plaintiff Appointed
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
Collecting participants…

Seagate Technology PLC

Seagate Technology Holdings plc provides data storage technology and solutions in Singapore, the United States, the Netherlands, and internationally. It provides mass capacity storage products, inc...

    Ticker
    STX.US
    ISIN
    IE00BKVD2N49
    CIK
    1137789
    Sector
    Technology
    Industry
    Computer Hardware
    Country
    USA
    Address
    38/39 Fitzwilliam Square, Dublin, Ireland, D02 NX53