Seagate reaches $175 million settlement of shareholder claims it concealed sales to Huawei

Seagate Technology has settled a shareholder lawsuit for $175 million after allegations that the company concealed sales of hard disk drives worth over $1.1 billion to Huawei Technologies, violating U.S. export control laws. The preliminary settlement, filed in San Francisco federal court, involves Seagate, its CEO Dave Mosley, and CFO Gianluca Romano, pending a judge’s approval. Shareholders, including pension funds from Arkansas, Mississippi, Germany, and Luxembourg, claimed Seagate inflated its profits and share price by hiding the sale of more than 7.4 million drives to Huawei between September 2020 and April 2023. The settlement follows a $300 million penalty imposed by the U.S. Department of Commerce’s Bureau of Industry and Security in April 2023—the largest civil penalty in the agency’s history unrelated to a criminal case. Seagate denied wrongdoing but agreed to the settlement, allocating $105 million from its own funds and expecting insurers to cover the remaining $70 million. Lawyers for the shareholders aim to secure up to 25% of the settlement for legal fees. Seagate, headquartered in Singapore and incorporated in Ireland, operates U.S. facilities in Fremont, California. Huawei, based in Shenzhen, has denied allegations of being a national security threat despite being blacklisted by the U.S. government in 2019 for trade restrictions. The proposed class period spans from September 14, 2020, to April 19, 2023, encompassing the alleged concealment of sales to Huawei.