Confirmed Class Action vs. Stec

Kahn Swick & Foti, LLC (KSF), a law firm focused on securities class action litigation with offices in New Orleans and New York City, has filed a class action lawsuit against STEC, Inc. in the United States District Court for the Central District of California, on behalf of purchasers of the common stock of the Company between June 16, 2009 and November 3, 2009, inclusive. No class has yet been certified in this action.

STEC and certain of its officers and directors, and the Company’s underwriters are charged with including, or allowing the inclusion of, materially false and misleading statements in the Registration Statement and Prospectus issued in connection with its August 6, 2009 Secondary Offering, in violation of the Securities Act of 1933. Additionally, Defendants are charged with making a series of materially false and misleading statements related to the Company’s business and operations in violation of the Securities Exchange Act of 1934.

The Complaint charges that contrary to the positive statements made by Defendants during the Class Period, on November 3, 2009, Defendants revealed: STEC would come nowhere near achieving guidance previously sponsored and/or endorsed by Defendants; STEC’s largest customer, which accounted for at least 90% of its ZIOS solid state drives, had so much excess inventory from the second and third quarters of 2009 that it would be impossible for the Company to meet earnings expectations for 3Q09 or 4Q09; and it would probably be well into 2010 before EMC could work off the excess.

As a direct result of Defendants’ disclosures, the following day, on November 4, 2009, STEC’s stock price collapsed over 30% to close at just above $14.00 per share – a Class Period trading low – on huge volume of almost 32 million shares, many times the average daily trading volume of STEC’s stock. Shareholders who purchased at the Class Period high suffered losses of as much as $28.00 per share, while Company insiders were selling over $320 million of their privately-held shares.