STEC Shares Plunged: What You Need to Know

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of STEC (Nasdaq: STEC  ) fell more than 10% in early trading and remain down 6% as I write this. Last night, the maker of large-scale flash storage technology disclosed the preliminary results of an SEC investigation.

So what: Regulators began looking into the trading of STEC shares in 2009. Now, according to a company filing, the SEC is on the verge of initiating civil injunction against the company and key executives for violating the antifraud and reporting provisions of federal securities laws.

Now what: As if STEC investors needed more reason to worry. The company already faces stiff competition from the likes of Intel (Nasdaq: INTC  ) and SanDisk (Nasdaq: SNDK  ) . Now STEC's top executives are facing possible fraud charges. If formally brought, there's certain to be a shake-up of some kind -- exactly the sort of nonsense customers and investors alike would prefer to avoid. Do you agree? Where do you stand on STEC? Let us know using the comments box below.

Interested in more info on STEC?Add it to your watchlist.

Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team. He didn't own shares in any of the companies mentioned in this article at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Google+ or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.

The Fool owns shares of and has bought calls on Intel. Motley Fool newsletter services have recommended buying shares of Intel. Motley Fool newsletter services have recommended creating a diagonal call position in Intel. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On July 26, 2011, at 5:25 PM, Western27 wrote:

    You need to get real. STEC's management is three brothers that have bled this company from day one. For example, they own all the building and pay themselves super rent. They lease expensive cars for each other every year. This company is and always will be a phooy. Anyone stupid enough to buy the stock deserves what the market give them.

  • Report this Comment On July 26, 2011, at 9:44 PM, jcreamer007 wrote:

    STEC's executives were early developers of enterprise SSDs and their shares are heavily shorted by wall street hedge funds. Name me one company where the executives are not well taken care. What is important is whether they deliver for their shareholders. Clearly Intel executives SUCK!!! The Intel shares I bought for $30/share in 1995 are not even close to what I paid for them. Intel executives don't care about their shareholders.

    We will all know after the close Thursday whether STEC executives have delivered or not for their shareholders. I wouldn't be so harsh on STEC executives as the commenter above me.

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