Technology company Seagate has agreed to pay $175 million to resolve a lawsuit alleging the firm misled investors by hiding sales that violated U.S. trade restrictions with China’s Huawei Technologies.
The preliminary agreement in the proposed class action lawsuit against Seagate, along with Chief Executive Dave Mosley and Chief Financial Officer Gianluca Romano, was submitted on Friday evening to a federal court in San Francisco and awaits judicial approval.
Investment groups led by retirement funds from Arkansas, Mississippi, Germany and Luxembourg alleged that Seagate artificially boosted its earnings and stock value by hiding its sale of over 7.4 million hard disk drives to Huawei.
While agreeing to the settlement, Seagate has maintained it did nothing wrong. The company’s alleged infractions resulted in a $300 million fine from the U.S. Department of Commerce’s Bureau of Industry and Security in April 2023, marking the agency’s largest civil penalty not connected to a criminal matter.
Seagate has not yet responded to requests for comment made on Monday regarding the settlement.
The company has allocated $105 million toward the settlement costs and expects insurance companies to cover approximately $70 million of the total amount.
The lawsuit covers the time period from September 14, 2020 through April 19, 2023.
According to regulatory documents, Seagate maintains its headquarters in Singapore and is incorporated in Ireland, while operating U.S. facilities in Fremont, California.
Huawei, headquartered in Shenzhen, conducts business across more than 170 nations and employs approximately 213,000 workers.
The U.S. government added Huawei to a trade restriction list in 2019 citing national security concerns. Officials subsequently limited sales to Huawei of certain international products containing U.S. technology. Huawei has rejected claims that it poses a security risk.
Legal representatives for the Seagate shareholders intend to request up to 25% of the settlement amount to cover attorney fees.
