Seagate reaches US$175 million settlement of shareholder claims it concealed sales to China's Huawei

Seagate reaches US$175 million settlement of shareholder claims it concealed sales to China's Huawei Seagate Technology reached a US$175 million settlement of a lawsuit claiming it defrauded shareholders by concealing it violated US export control laws by selling more than US$1.1 billion of hard disk drives to China's Huawei Technologies. A preliminary settlement of the proposed class action against Seagate, Chief Executive Dave Mosley and Chief Financial Officer Gianluca Romano was filed late on Friday (May 30) in San Francisco federal court, and requires a judge's approval. Shareholders led by pension funds in Arkansas, Mississippi, Germany and Luxembourg said Seagate inflated its profit and share price by concealing its sale of more than 7.4 million hard disk drives to Huawei. Seagate denied wrongdoing in agreeing to settle. Its alleged violations culminated in a US$300 million penalty from the US Department of Commerce's Bureau of Industry and Security in April 2023, the largest civil penalty not tied to a criminal case in that agency's history. • Seagate did not immediately respond to requests on Monday for comment. • It has set aside $105 million for the settlement, and estimated that insurers would pay about $70 million of the settlement amount. • The proposed class period runs from Sep 14, 2020 to Apr19, 2023. • Seagate is based in Singapore and incorporated in Ireland, according to regulatory filings, and has U.S. operations in Fremont, California. • Huawei, based in Shenzhen, operates in more than 170 countries and has about 213,000 employees. • The US government put Huawei on a trade blacklist in 2019 for national security reasons. It later restricted the sale to Huawei of some foreign items made with US technology. Huawei has denied it is a threat. • Lawyers for the Seagate shareholders plan to seek up to 25 per cent of the settlement fund for legal fees.