Seagate Technology (NASDAQ:STX) Holdings plc (NASDAQ:STX) is the subject of a class action lawsuit filed by Bronstein, Gewirtz & Grossman, LLC and Hagens Berman Sobol Shapiro LLP, both nationally recognized law firms. The lawsuit alleges Seagate and certain officers violated federal securities laws, causing substantial losses to investors who purchased or otherwise acquired Seagate common stock between September 15, 2020, and October 25, 2022.
The litigation centers on Seagate's previous assurances that it complied with the U.S. Export Administration Regulations (EAR) and did not do business with companies listed as threats to U.S. national security and foreign policy by the U.S Commerce Department's Bureau of Industry and Security (BIS).
The complaint alleges that Seagate made misleading statements and failed to disclose the nature and magnitude of its hard disk drive (HDD) sales to Huawei, a company on the BIS Entity List. It is claimed that Seagate saw a significant acceleration in sales to Huawei immediately after BIS rules became effective, while competitors stopped selling to Huawei. Additionally, it is alleged that Seagate's HDD manufacturing process, which includes the use of covered U.S. software and technology in essential production processes, rendered its sales to Huawei in violation of BIS export rules.
Investors started learning about these issues on October 26, 2022, when Seagate revealed that it received a Proposed Charging Letter from BIS in late August 2022 alleging violations of EAR by providing HDDs to a customer on the BIS Entity List between August 2020 and September 2021.
On April 19, 2023, BIS announced that Seagate had agreed to pay "the largest standalone penalty in BIS history" ($300 million) to settle BIS' claims that Seagate illegally shipped more than 7.4 million HDDs, valued at about $1.1 billion, to Huawei, which had been on the BIS Entity List since May 2019. This announcement led to a sharp drop in Seagate's share price.
The class action lawsuit has already been filed and investors who suffered a loss have until Friday, September 8, 2023, to request the Court to appoint them as lead plaintiff.
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