Seagate Technology Holdings plc

On October 26, 2022, before the market opened, Seagate disclosed that it had been warned by the U.S. Commerce Department’s Bureau of Industry and Security (“BIS”) that it may have violated export control laws by selling hard disk drives (“HDDs”) to a customer on the trade blacklist, reportedly China-based Huawei.

On this news, Seagate’s stock fell $4.61, or 7.9%, to close at $53.39 on October 26, 2022, thereby injuring investors.

The complaint filed in this class action alleges that throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants failed to disclose to investors: (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) that 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) as a result, 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 the Company to hundreds of millions of dollars in fines and penalties; and (4) as a result, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis at all relevant times.