Seagate Technology has agreed to a $175 million settlement to resolve a shareholder fraud lawsuit concerning undisclosed sales of hard disk drives to Huawei Technologies. The preliminary agreement was filed late Friday in a San Francisco federal court and awaits judicial approval.
The class-action suit targets Seagate, along with CEO Dave Mosley and CFO Gianluca Romano. Shareholders, including pension funds from Arkansas, Mississippi, Germany, and Luxembourg, alleged that Seagate misled investors by not revealing the sale of over 7.4 million hard drives to Huawei, valued at more than $1.1 billion. They claimed this omission artificially boosted the company’s profits and stock price.
While Seagate denies any misconduct, it has opted to settle the case. This dispute follows a prior enforcement action, notably a $300 million penalty imposed by the US Department of Commerce’s Bureau of Industry and Security in April 2023—the largest civil fine in the agency’s history unrelated to a criminal case.
Seagate has already allocated $105 million for the settlement, with insurers expected to cover an additional $70 million. The class period spans from September 14, 2020, to April 19, 2023.
Seagate is incorporated in Ireland, headquartered in Singapore, and maintains significant operations in Fremont, California. Huawei, based in Shenzhen, operates in over 170 countries and employs approximately 213,000 people.
In a significant development, the US government placed Huawei on a trade blacklist in 2019 citing national security concerns and subsequently tightened export restrictions involving US technology. Huawei has consistently denied posing any security threat.
Legal representatives for the shareholders are anticipated to request up to 25 percent of the settlement fund as legal fees.
