SEC v. Ryan Petersen, No. 5:15-cv-04599, District of Columbia (Jan. 1, 2015) — Complaint

SEC v. Petersen
Complaint
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KEVIN C. LOMBARDI (DC BAR NO. 474114) ([email protected])
IAN R. DATTNER (NY BAR NO. 4411187) ([email protected])
LISA WEINSTEIN DEITCH (CA BAR NO. 137492) ([email protected])

Attorneys for Plaintiff
SECURITIES AND EXCHANGE COMMISSION
100 F Street, NE
Washington, DC 20549
Telephone:  (202) 551-8753 (Lombardi)
Facsimile:  (202) 772-9291 (Lombardi)

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

 The Securities and Exchange Commission (“Commission”) alleges as follows for its
complaint against defendant Ryan Petersen (“Petersen”):
SUMMARY OF ALLEGATIONS
1. This action concerns an accounting fraud orchestrated by Ryan Petersen at OCZ
Technology Group, Inc. (“OCZ”), a now-bankrupt company that sold computer memory storage
and power supply devices primarily to distributors, e-tailers, and original equipment
manufacturers.
SECURITIES AND EXCHANGE COMMISSION,

  Plaintiff,

 v.

RYAN PETERSEN,

  Defendant.

COMPLAINT

DEMAND FOR JURY TRIAL

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SEC v. Petersen
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2. Petersen was OCZ’s CEO from the time he founded OCZ in 2002 until he was
forced to resign in September 2012.  Petersen promoted OCZ to investors as a company that had
experienced, and was positioned to experience, significant revenue and gross margin growth.  At
the time he did so, however, Petersen was engaged in a multi-faceted scheme to materially
inflate these metrics.  The scheme included (1) mischaracterizing sales discounts as marketing
expenses, (2) channel-stuffing OCZ’s largest customer to improperly inflate revenues,  and
(3) concealing customer product returns so that those returns would not be recorded in OCZ’s
books and records or financial statements.
3. First, to misclassify sales discounts as marketing expenses, Petersen implemented
a program called “customer based programs” or “CBPs,” which were purportedly for the purpose
of providing funding to customers for short-term marketing programs.  Customers received this
funding in the form of credits to the customers’ accounts.  In contrast to a legitimate marketing
program, however, Petersen used CBPs as a mechanism to disguise sales discounts, which
reduce net revenues, as marketing expenses, which are reported as operating expenses and do not
affect revenues.  Among other things, Petersen personally negotiated and directed others to
negotiate CBP credits that were, in truth, sales discounts.  Petersen’s scheme caused OCZ to
recognize tens of millions of dollars as marketing expenses that should have been recorded as
revenue reductions.
4. Second, Petersen engaged in channel stuffing with OCZ’s largest customer – that
is, shipping more goods to the customer than it could sell in the normal course of business.
Although Petersen was informed that the customer could not pay for the products already in its
inventory, he continued to ship products to the customer so that OCZ could increase its reported

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SEC v. Petersen
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revenues.  He also repeatedly provided CBP credits to the customer in order to reduce the price
of the OCZ products sitting in its inventory.
5. Finally, Petersen concealed large product returns – including one for nearly
$3.5 million in mid-2012 – from OCZ’s finance department and OCZ’s auditor.  Petersen
instructed employees not to process certain returns and asked that one of the returns be made to
“disappear.”  He then lied about the returns to members of OCZ’s finance department and OCZ’s
auditor.  As a result of Petersen’s actions, the returns were not recorded in OCZ’s books and
records or its financial statements.
6. Petersen signed and certified the accuracy of financial statements from the third
quarter of fiscal 2011 through the first quarter of fiscal 2013,
1
 although he knew, or was reckless
in not knowing, that the filings contained materially false or misleading statements.  Petersen
also made material misstatements in OCZ’s press releases concerning its quarterly and annual
financial results from the third quarter of fiscal 2011 through the first quarter of fiscal 2013.
7. The picture that Petersen portrayed of OCZ’s operations and financial condition
to investors was a far cry from its true operational and financial condition.  Based largely on this
false and misleading information, OCZ raised over $200 million from investors from 2010
through 2012.
8. Petersen personally profited from his misstatements by, among other things,
selling shares of OCZ stock and receiving a bonus during the period when OCZ’s financial
results were improperly inflated in public filings.

1
  OCZ’s fiscal year ended at the end of the month of February.  Accordingly, the third
fiscal quarter of 2011 consisted of the three months ending November 30, 2010, and the first
fiscal quarter of 2013 consisted of the three months ending May 31, 2012.

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SEC v. Petersen
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9. By engaging in the conduct described in this Complaint, Petersen violated the
anti-fraud provisions of Section 17(a) of the Securities Act of 1933 (“Securities Act”) [15 U.S.C.
§ 77q(a)] and Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934 (“Exchange
Act”)
[15 U.S.C. § 78j(b) and 17 C.F.R. § 240.10b-5]; the internal controls and books and records
provisions of
Section 13(b)(5) of the Exchange Act [15 U.S.C. § 78m(b)(5)] and Exchange Act
Rules 13b2-1 [17 C.F.R. § 240.13b2-1]  ; the lying to accountants provision of Exchange Act Rule
13b2-2 [17 C.F.R. §240.13b2-2]  ; the certification provision of Exchange Act Rule 13a-14
[17 C.F.R. § 240.13a-14]; and the clawback provision of Section 304 of the Sarbanes-Oxley Act
of 2002 (“Sarbanes-Oxley”) [15 U.S.C. § 7243(a)] and aided and abetted OCZ’s violations of the
reporting, books and records, and internal controls provisions of Sections 13(a) and 13(b)(2)(A)
and 13(b)(2)(B) of the Exchange Act [15 U.S.C. §§ 78m(a), 78m(b)(2)(A) and 78m(b)(2)(B)]
and Exchange Act Rules 12b-20, 13a-1, 13a-11, and 13a-13 [17 C.F.R. §§ 240.12b-20, 240.13a-
1, 240.13a-11 and 240.13a-13].
10. The Commission seeks an order enjoining Petersen from future violations of the
above provisions of the Securities Act and Exchange Act, requiring him to disgorge his ill-gotten
gains with prejudgment interest and pay appropriate civil money penalties, requiring him to
forfeit any bonus, incentive based compensation or stock sales profits received during the
relevant period and imposing upon him an officer and director bar.

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SEC v. Petersen
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JURISDICTION AND VENUE
11. This Court has jurisdiction over this action pursuant to Sections 20 and 22 of the
Securities Act [15 U.S.C. §§ 77t and 77v] and Sections 21 and 27 of the Exchange Act [15
U.S.C. §§ 78u and 78aa].
12. Venue is proper in this judicial district pursuant to Section 22 of the Securities
Act [15 U.S.C. § 77v(a)] and Section 27 of the Exchange Act [15 U.S.C. § 78aa] because certain
of the acts and omissions constituting violations alleged herein occurred in this judicial district.
13. Intradistrict Assignment.  Assignment to the San Jose Division is appropriate
pursuant to Civil L.R. 3-2(c) and (e) because a substantial part of the events or omissions giving
rise to the Commission’s claims occurred in the County of Santa Clara.
14. Petersen, directly and indirectly, made use of the mails and of the means and
instrumentalities of interstate commerce in connection with the acts, practices, and courses of
business described in this Complaint.
DEFENDANT
15. Ryan Petersen, age 40, founded OCZ and was its CEO from 2002 until he was
forced to resign in September 2012.  In 2012, OCZ disclosed in publicly-filed documents that,
prior to founding OCZ, Petersen pled guilty or was convicted of crimes for conduct including
theft, selling stolen property, and forging a check.  Petersen moved to Panama shortly after his
forced resignation from OCZ.  Upon information and belief, Petersen currently resides in
Panama.
RELEVANT ENTITY
16. OCZ was a Delaware corporation formed in 2002 that was headquartered in San
Jose, California.  OCZ sold computer memory storage and power supply devices primarily to

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SEC v. Petersen
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distributors, e-tailers, and original equipment manufacturers.  Shares of OCZ’s stock traded on
the AIM Market of the London Stock Exchange plc from June 2006 through April 2009.  OCZ’s
common stock was traded on the OTCBB from February 10, 2010 to April 22, 2010, when it
began trading on the NASDAQ Capital Market.  OCZ filed for bankruptcy in December 2013.
On February 24, 2014, OCZ’s common stock was de-listed from NASDAQ.  On April 16, 2015,
the Commission issued an Order Instituting Proceedings, Making Findings, and Revoking
Registration of Securities Pursuant to Section 12(j) of the Securities Exchange Act of 1934.
OCZ has liquidated its assets and is no longer operating.
FACTS
Background
17. Petersen founded OCZ in 2002.  Although the company had engaged in a number
of computer-related businesses since its founding, from approximately 2008 through its
dissolution, OCZ primarily focused up selling solid state drives (“SSDs”), a new generation of
computer storage drives that OCZ promoted as being superior to traditional hard drives.  OCZ
sought to capitalize on the expected growth of the SSD market.
18. Statements made to investors in certain filings with the Commission, which were
signed by Petersen, and statements that Petersen made to investors in press releases, which were
attached to Commission filings, emphasized OCZ’s past, and expected future, revenue growth
and gross margin improvements.  OCZ provided guidance concerning revenues and gross
margins, and securities analysts focused on these metrics.
19. Petersen emphasized to OCZ employees the importance of achieving revenue and
gross margin targets.  For example, in a May 3, 2012 email, Petersen instructed OCZ’s Vice
President of Purchasing, “we must find a way to report nasty high [ma]rgins.”  A few days later,

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on May 7, 2012, Petersen asked this executive:  “  What other creative margin enhancements can
we make[?]”  On May 28, 2012, Petersen wrote to two executives, “If we miss our targets here it
will be disastrous.”  And on May 30, 2012, the day before quarter-end, Petersen emailed the
executives, “If we miss our revenue number you may have misunderstood but they will be
replacin[g] management.”
20. Petersen’s emphasis on OCZ’s revenue and gross margin growth in marketing
OCZ to investors was successful.  OCZ raised over $200 million from investors from 2010
through 2012 through equity offerings.  Much of this capital was raised through registration
statements that incorporated false and misleading financial statements.
21. In late 2011, OCZ began negotiating with another technology company about the
possible sale of OCZ.  Revenue growth and gross margin improvements were important metrics
to the potential acquiring company.  Negotiations temporarily ceased, but started once again in
the Spring of 2012.  In June 2012, Petersen emailed OCZ’s former CFO, “[i]f we don’t have
numbers that look reasonable on a high revenue raise and good Gross profit margins for q1 we
will be lucky to trade over cash value and I am sure they will withdraw their offer completely.”
22. During the time period when Petersen was promoting the company to investors
and trying to sell the company by focusing on revenue and gross margin growth, he was engaged
in a scheme to materially inflate these metrics, as described further below.

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Mischaracterization of Sales Discounts as Marketing
23. In 2010, Petersen instituted a program that he called “customer based programs”
or “CBPs,” pursuant to which OCZ would purportedly offer short-term marketing programs to its
customers.  OCZ would pay for the purported marketing by providing credits to its customers.
24. Historically, in addition to offering marketing funding to customers, OCZ had
provided customers with several types of sales discounts commonly used within the industry,
including instant rebates, price protection, and volume incentive rebates.  OCZ properly recorded
these sales discounts as reductions to revenue.  CBPs, by contrast, were recorded as marketing
expenses in OCZ’s books and records and on its financial statements.  Therefore, unlike other
sales discounts, OCZ did not reduce its net revenues or gross margins when it issued CBP
credits.
25. Beginning in at least September 2010, Petersen instructed employees to
characterize sales discounts provided to customers as CBPs—regardless of whether customers
would provide any marketing, whether the value of any marketing provided was equal to the
funding given by OCZ, or whether the credits were contingent upon future sales of OCZ
products.
26. Petersen directly negotiated deals with certain customers where sales discounts
were classified as CBPs.  For example, in one instant message to a customer, Petersen agreed
that the customer could purchase product at an effective price of $52 per solid state drive “after
CBP,” but requested that the purchase order indicate a price of $60 per drive.  In another
instance, Petersen asked a customer about his pricing of three products “after CBP,” indicating
that the CBP credits had been provided to bring down the price of a product—not for marketing
purposes.  Likewise, Petersen emailed a customer offering nearly $277,000 in CBP credits in

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connection with a proposed purchase of OCZ products without referencing any marketing that
the customer would perform.
27. Petersen actively concealed the CBP scheme.  Petersen instructed employees to
complete marketing approval forms so as to falsely classify sales discounts as CBP credits within
OCZ’s accounting records.  Petersen also instructed employees to use round-dollar amounts on
the forms, which would be indicative of true marketing funding that was the product of
independent negotiation and which further would hide the fact that the discount had been
calculated on a per-unit basis.  On one occasion, he also instructed an employee to alter the dates
on CBP documentation with respect to multiple customers after the documentation had been
completed so that the CBP credits would be recorded in later time periods.
28. In further concealment of the CBP scheme, Petersen reprimanded employees and
customers for even mentioning sales discounts.    In December 2010, Petersen emailed one
executive, “Be care[ful] with the word IR [instant rebate].  We call those all CBP where
possible.”  In another instance where a salesperson suggested that OCZ offer a customer an
instant rebate, Petersen responded, “why are you emailing around stuff that says IR [instant
rebate] in it . . . WTF . . . you can never say that word ever!”  Similarly, in a 2012 email with a
customer who referenced price protection, Petersen stated that OCZ does not offer price
protection and suggested that the conversation be taken “offline.”
29. CBP funding grew substantially between late 2010 and September 2012.  By
mid-2012, virtually all discounts were classified as CBPs and reported as marketing expenses,
rather than reductions to revenue.
30. U.S. generally accepted accounting principles (“GAAP”) requires vendors, such
as OCZ, to record sales discounts as reductions to revenue.  Doing so, in turn, reduces gross

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SEC v. Petersen
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profits.  Specifically, where the vendor provides consideration, such as a marketing credit, to a
customer, the vendor must reduce revenue by the amount of that consideration unless two criteria
are met:  (1) the vendor receives an identifiable benefit for consideration that could have been
obtained from a party other than the purchaser of the product; and (2) the vendor can reasonably
estimate the fair value of the benefit.  See A ccounting Standards Codification ( “ASC”) 605-50-
45.  Petersen understood, or was reckless in not understanding, these requirements before he
instituted and executed the CBP scheme.
31. Petersen also understood, or was reckless in not understanding, the effect that
misclassifying discounts as marketing expenses had on OCZ’s financial statements.  He received
numerous analyses indicating that sales discounts affected OCZ’s revenues and gross profits,
whereas CBP expenses were recorded “below the line”—i.e., did not affect revenues or gross
profits.
32. Petersen’s scheme to mischaracterize sales discounts as marketing expenses
resulted in OCZ reporting materially inflated revenues and gross profits in its periodic reports
from the quarter ending November 30, 2010 through the quarter ending May 31, 2012.
Channel Stuffing OCZ’s Largest Customer
33. OCZ’s largest customer in 2012 and the first quarter of 2013 was a German
distributor (“German Distributor”).  German Distributor accounted for approximately 10% of
OCZ’s sales in 2012 and approximately 17% of OCZ’s sales in the first quarter of 2013.
Petersen personally conducted OCZ’s negotiations with German Distributor.
34. Petersen’s negotiations resulted in shipments of OCZ product to German
Distributor in advance of any commercially reasonable demand for those products, i.e., channel-
stuffing.  OCZ’s recognition of revenues for most of these shipments was improper under GAAP

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and was inconsistent with OCZ’s own revenue recognition policy set forth in its annual reports,
which Petersen signed and certified.
35. Under GAAP, revenue must be realized or realizable and earned before it can be
recognized.  Consistent with these requirements, OCZ’s revenue recognition policy provided,
among other things, that it recognized revenue when, among other things, (1) the terms are fixed,
and (2) collection is probable.
36. Petersen knew that OCZ’s prices were not fixed for products sold to German
Distributor.  Petersen repeatedly promised German Distributor that he would offer German
Distributor discounts characterized as CBPs to reduce German Distributor’s carrying cost for
OCZ products.  Petersen provided German Distributor with millions of dollars in discounts
mischaracterized as CBP funding to bring down German Distributor’s costs on an ongoing basis.
Petersen instructed an employee to provide false information to an OCZ accountant about the
amount of CBP credits that he had promised to German Distributor.
37. Petersen also knew that collectability was not probable for products sold to
German Distributor.  German Distributor’s owner indicated in multiple emails to Petersen that it
could not pay for the OCZ inventory that it had in stock.  As early as October 2011, German
Distributor’s owner sent Petersen an email with the subject line “PROBLEMS,” noting that he
and Petersen had agreed to “payment after sellout.”  Petersen responded that German Distributor
should blow out the product below cost and he would make it up to German Distributor later.  In
December 2011, German Distributor’s owner emailed that he had “Stock Problems” and
requested that Petersen help him out.  The warnings about German Distributor’s inventory levels
grew increasingly dire over time.  In late May 2012, German Distributor’s owner emailed
Petersen that he had “too many OCZ in Stock...I need your help” and sent a separate email

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approximately one week later stating,  “I am dead---too many OCZ stock.”   In June 2012,
German Distributor’s owner emailed Petersen, “I am in fear...seriously.”
38. As German Distributor’s outstanding balance grew, Petersen forbade others at
OCZ from dealing directly with German Distributor and lied about the reasons for German
Distributor’s growing balance.
39. The repeated CBP credits issued to German Distributor and the stated concerns of
German Distributor’s owner about the distributor’s ability to pay for OCZ’s products should
have precluded revenue recognition for purported sales to German Distributor.  Petersen knew or
was reckless in not knowing that sales to German Distributor failed to comply with GAAP or
OCZ’s revenue recognition criteria.
40. As a result of OCZ’s channel stuffing, which was directed by Petersen, OCZ
reported materially inflated revenues and gross profits in its periodic reports from the quarter
ending February 29, 2012 through the quarter ending May 31, 2012.
Concealing Product Returns
41. Petersen also directed OCZ employees not to process or record a number of
significant product returns from customers.
42. In one instance, a Chinese distributor (“Chinese Distributor”) returned
approximately $1 million of product to OCZ’s Taiwan warehouse in late December 2011, after
Petersen failed in his efforts to convince Chinese Distributor not to return the product.  Petersen
subsequently took steps to hide the return from OCZ’s finance department and its auditor.
43. Petersen first instructed an employee that the return should not be processed.
Petersen received an email confirming that his instruction had been followed.  Then, after several
months of hiding the return, i.e., failing to record the product as inventory in OCZ’s records,

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Petersen told employees to make the returned product disappear.  At around the time he gave that
instruction, Petersen informed an employee that if OCZ recorded the return, it would have to
restate prior financials.  Petersen’s instructions were carried out:  a truck driver in Taiwan picked
up the products on or about May 24, 2012 without paying for the product.  At the time, OCZ
failed to reduce its revenues or to increase its inventory for the amount of the product return.
44. Separately, during the third quarter of fiscal 2012, a large distributor made one of
the largest purchases in OCZ’s history.  The distributor, however, had difficulty selling the
products it purchased.  In late May 2012, Petersen agreed to accept a return of nearly $3.5
million worth of product in exchange for the distributor’s agreement to purchase a similar
amount of product before the end of the first quarter of fiscal 2013.
45. Petersen requested that the distributor wait to return the product until sometime in
June 2012—in other words, after the end of the quarter on May 31, 2012.  Petersen subsequently
authorized an employee to issue a document memorializing the authorization of the return to be
sent to the customer.  When the distributor attempted to return the goods in approximately late
June 2012, however, Petersen told OCZ’s finance department that he had rejected the return.
The goods were stored in a warehouse controlled by the freight company that had attempted to
deliver the goods.
46. As a result of Petersen’s conduct, OCZ did not record the return of the goods in
its accounting records or its financial statements.
47. After holding the returns for approximately one to two months at the warehouse,
OCZ ultimately took the goods back after others at OCZ learned about the issue.

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48. In addition to the returns described above, OCZ received several additional
significant customer returns in approximately late May/early June 2012.  Petersen directed
employees not to process the returns—which totaled over $575,000.
49. Petersen’s instructions not to process the returns in May and June 2012 coincided
with the ramp-up of negotiations and due diligence in connection with a potential merger/buyout.
50. As a result of Petersen’s scheme not to record the product returns, OCZ reported
materially inflated revenues and gross profits in the fourth quarter of 2012 and the first quarter
of 2013.
Petersen’s Scheme Comes To Light
51. On September 5, 2012, OCZ announced that it would miss its revenue guidance
for the second quarter of fiscal 2013.  On September 17, 2012, OCZ announced Petersen’s
resignation as CEO and a director of the company.  Subsequently, on October 10, 2012, OCZ
announced that it would delay the filing of its Form 10-Q for the second quarter of fiscal 2013
and was reducing its revenue expectations for the quarter, primarily based on the revenue impact
of “customer incentive programs . . . which the Company will be reporting as a material
weakness.”  OCZ’s stock price plummeted following the September 5 and October 10
announcements.

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52. In October 2013, OCZ issued a restatement of its financial statements.  As
reflected in the below table, in the period from the third quarter of 2011 through the first quarter
of 2013, OCZ reduced revenues by nearly $99 million, reducing revenues by more than 48% in
the quarter ending May 31, 2012:

53. OCZ’s reduction of its gross profits as part of the restatement was even more
dramatic, reducing gross profits by over $116 million from the third quarter of 2011 through the
first quarter of 2013 as summarized in the following table:

54. Less than two months after filing the restatement, OCZ filed for bankruptcy
protection.  It has since liquidated all of its assets and is no longer operating.
Net Revenues (000s)

Quarter EndingAs FiledChange
Restatement% Overstated
11/30/2010
53,222

( 622)                    52,600

1.2%
2/28/201164,566

 ( 5,586)

58,980
 9.5%
5/31/2011
73,794

( 9,826)                63,968
 15.4%
8/31/201178,454
 ( 2,058)

76,396            2.7%
11/30/2011103,084
     ( 15,424)
              87,660

17.6%
2/29/2012
110,442     ( 28,306)
              82,136

 34.5%
5/31/2012
113,620
( 37,128)
76,492
 48.5%
Totals597,182
     ( 98,950)
 498,232

19.9%
Gross Profit (000s)

Quarter EndingAs FiledChangeRestatement
11/30/2010
7,661           ( 4,310)
 3,351

2/28/201110,709
         ( 4,940)
           5,769

5/31/201114,744         ( 9,135)

5,609
8/31/201116,931
         ( 10,104)         6,827
11/30/201123,175
         ( 22,164)
 1,011
2/29/201227,586

( 28,823)         ( 1,237)
5/31/201228,431         ( 36,836)
         ( 8,405)
Totals
129,237      ( 116,312)      12,925

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Misrepresentations in Commission Filings And To OCZ’s Auditor
55. Petersen’s actions, as described above, resulted in material misrepresentations in
the following OCZ filings with the Commission:
a. OCZ’s annual reports on Form 10-K for the years 2011 and 2012, each of
which was signed and certified by Petersen;
b. OCZ’s quarterly reports on Form 10-Q for the periods ending November 30,
2010, May 31, 2011, August 31, 2011, November 30, 2011 and May 31, 2012,
each of which was signed and certified by Petersen;
c. OCZ’s current reports on Form 8-K, filed on July 10, 2012, May 1, 2012,
January 9, 2012, October 5, 2011, July 6, 2011, May 3, 2011, and January 10,
2011.
d. OCZ’s Form S-8 dated December 22, 2010, which was signed by Petersen,
and incorporated by reference one or more of the misstated financial
statements;
e. OCZ’s Form S-8 dated October 14, 2011, which was signed by Petersen, and
incorporated by reference one or more of the misstated financial statements;
f. OCZ’s Form S-3 dated December 1, 2011, which was signed by Petersen, and
incorporated by reference one or more of the misstated financial statements.
56. Petersen also falsely certified, in OCZ’s quarterly reports for the period ending
November 30, 2010 through the period ending May 31, 2012 and in OCZ’s annual reports for
2011 and 2012, that he reviewed each of the reports and that, among other things, (i) to the best
of his knowledge the financial statements did not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements made, in light of the

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circumstances under which such statements were made, not misleading with respect to the period
covered by the reports; (ii) to the best of his knowledge the financial statements, and other
financial information included in the reports, fairly presented in all material respects the financial
condition, results of operations and cash flows of OCZ for the periods presented in the reports;
and (iii) he had designed internal control over financial reporting, or caused such internal control
over financial reporting to be designed, to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles.
57. In management representation letters sent to OCZ’s auditor in connection with the
periodic reports from the period ending November 30, 2010 through the period ending May 31,
2012, and in management representation letters concerning certain registration statements during
the period, Petersen falsely represented, among other things, that (i) he believed the financial
statements conformed with GAAP; (ii) all financial and related data had been made available to
the auditor; and (iii) he had no knowledge of fraud or suspected fraud involving management.
FIRST CLAIM FOR RELIEF
Fraud: Section 10(b) of the Exchange Act and Rule 10b-5
[15 U.S.C. § 78j(b) and 17 C.F.R. § 240.10b-5]

58. Paragraphs 1 through 57 are realleged and incorporated by reference herein.
59. Petersen, by engaging in the conduct described above, directly or indirectly, in
connection with the purchase or sale of a security, by the use of means or instrumentalities of
interstate commerce, of the mails, or of the facilities of a national securities exchange, with
scienter:
a. employed devices, schemes, or artifices to defraud;

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b. made untrue statements of a material fact or omitted to state a material fact
necessary in order to make the statements made, in the light of the
circumstances under which they were made, not misleading; and
c. engaged in acts, practices, or courses of business which operated or would
operate as a fraud or deceit upon other persons.
60. By engaging in the conduct described above, Petersen violated, and unless
restrained and enjoined will again violate, Section 10(b) of the Exchange Act [15 U.S.C. §
78j(b)] and Rules 10b-5(a), (b), and (c) thereunder [17 C.F.R. §§ 240.10b-5(a), (b), and (c)].
SECOND CLAIM FOR RELIEF
Fraud in the Offer or Sale of Securities: Section 17(a) of the Securities Act
[15 U.S.C. § 77q(a)]

61. Paragraphs 1 through 57 are realleged and incorporated by reference herein.
62. Petersen, by engaging in the conduct described above, directly or indirectly, in
connection with the purchase or sale of a security, by the use of means or instrumentalities of
interstate commerce, of the mails, or of the facilities of a national securities exchange:
a. knowingly or recklessly employed devices, schemes, or artifices to defraud;
b. knowingly, recklessly or negligently obtained money or property by means of
untrue statements of material fact or omissions to state a material fact
necessary in order to make the statements made, in light of the circumstances
under which they were made, not misleading; and
c. knowingly, recklessly or negligently engaged in transactions, practices, or
courses of business which operated or would operate as a fraud or deceit upon
purchasers of securities.

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63. By engaging in the conduct described above, Petersen violated, and unless
restrained and enjoined will again violate, Sections 17(a)(1), (2), and (3) of the Securities Act [15
U.S.C. §§ 77q(a)(1), (2), and (3)].
THIRD CLAIM FOR RELIEF
Knowingly Falsifying Books, Records, or Accounts: Section 13(b)(5) of the Exchange Act
[15 U.S.C. § 78m(b)(5)]

64. Paragraphs 1 through 57 are realleged and incorporated by reference herein.
65. Petersen, by engaging in the conduct described above, knowingly circumvented or
knowingly failed to implement a system of internal accounting controls.
66. By engaging in the conduct described above, Petersen violated, and unless
restrained and enjoined will again violate, Section 13(b)(5) of the Exchange Act [15 U.S.C. §
78m(b)(5)].
FOURTH CLAIM FOR RELIEF
Falsified Books, Records, or Accounts: Rule 13b2-1 of the Exchange Act
[17 C.F.R. § 240.13b2-1]

67. Paragraphs 1 through 57 are realleged and incorporated by reference herein.
68. Petersen, by engaging in the conduct described above, directly or indirectly,
falsified or caused to be falsified OCZ’s books, records, and accounts subject to
Section 13(b)(2)(A) of the Exchange Act [15 U.S.C. § 78m(b)(2)(A)].
69. By engaging in the conduct described above, Petersen violated, and unless
restrained and enjoined, will in the future violate Rule 13b2-1 of the Exchange Act [ 17 C.F.R.
§ 240.13b2-1].

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FIFTH CLAIM FOR RELIEF
Lying to Accountants: Rule 13b2-2 of the Exchange Act
[17 C.F.R. § 240.13b2-2]

70. Paragraphs 1 through 57 are realleged and incorporated by reference herein.
71. Petersen, by engaging in the conduct described above, directly or indirectly: (a)
made or caused to be made materially false or misleading statements to accountants; or (b)
omitted to state, or caused another person to omit to state, material facts necessary in order to
make statements made, in light of the circumstances under which such statements were made,
not misleading, to accountants in connection with: (1) an audit, review or examination of the
financial statements of the issuer required to be made; or (2) the preparation or filing of a
document or report required to be filed with the SEC.
72. By engaging in the conduct described above, Petersen violated, and unless
restrained and enjoined will again violate, Rule 13b2-2 of the Exchange Act [17 C.F.R. §
240.13b2-2].
SIXTH CLAIM FOR RELIEF
False Certifications: Rule 13a-14 of the Exchange Act
[17 C.F.R. § 240.13a-14]

73. Paragraphs 1 through 57 are realleged and incorporated by reference herein.
74. Petersen falsely certified in OCZ’s Forms 10-Q for the periods ended November
30, 2010, May 31, August 31 and November 30, 2011 and May 31, 2012 and Forms 10-K for the
periods ended February 28, 2011 and February 29, 2012 that, among other things, he reviewed
each of the reports and that (i) to the best of his knowledge the financial statements did not
contain any untrue statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by the reports; (ii) to the best of his knowledge the

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financial statements, and other financial information included in the reports, fairly presented in
all material respects the financial condition, results of operations and cash flows of OCZ for the
periods presented in the reports; and (iii) he had designed internal control over financial
reporting, or caused such internal control over financial reporting to be designed, to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting
principles.
75. By engaging in the conduct described above, Petersen violated and unless
restrained and enjoined will in the future violate Rule 13a-14 of the Exchange Act [17 C.F.R. §
240.13a-14].
SEVENTH CLAIM FOR RELIEF
Reporting Violations: Aiding and Abetting OCZ’s Violations of Section 13(a) and Rules
12b-20, 13a-1. 13a-11 and 13a-13 of the Exchange Act
[15 U.S.C. § 78m(a) and 17 C.F.R. §§ 240.12b-20, 240.13a-1, 240.13a-11 and 240.13a-13]
76. Paragraphs 1 through 57 are realleged and incorporated by reference herein.
77. OCZ violated Section 13(a) of the Exchange Act [15 U.S.C. § 78m(a)], and
Rules 12b-20, 13a-1, and 13a-13 thereunder [17 C.F.R. §§ 240.12b-20, 240.13a-1 and
240.13a-13], by filing with the Commission materially false and misleading periodic reports,
including annual and quarterly reports on Forms 10-K and 10-Q from the period ending
November 30, 2010 through the period ending May 31, 2012.  OCZ also violated Rule 13a-11 of
the Exchange Act [ 17 C.F.R. § 240.13a-11], by filing with the Commission false and misleading
current reports on Forms 8-K reporting false and misleading financial results for the periods
ending August 31, 2010 through May 31, 2012.
78. Petersen, by engaging in the conduct described above, knowingly or recklessly
provided substantial assistance to OCZ’s violation of Section 13(a) of the Exchange Act [15

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U.S.C. § 78m(a)], and Rules 12b-20, 13a-1, 13a-11 and 13a-13 thereunder [17 C.F.R. §§
240.12b-20, 240.13a-1, 240.13a-11 and 240.13a-13].
79. By engaging in the conduct described above,  and pursuant to Section 20(e) of the
Exchange Act [15 U.S.C. § 78t(e)], Petersen aided and abetted OCZ’s violations, and unless
restrained and enjoined will in the future aid and abet violations, of Section 13(a) of the
Exchange Act [15 U.S.C. § 78m(a)], and Rules 12b-20, 13a-1, 13a-11, and 13a-13 thereunder
[17 C.F.R. §§ 240.12b-20, 240.13a-1, 240.13a-11 and 240.13a-13].
EIGHTH CLAIM FOR RELIEF

Internal Controls / Recordkeeping: Aiding and Abetting OCZ’s Violations of Section
13(b)(2)(A) and (B) of the Exchange Act
[15 U.S.C. §§ 78m(b)(2)(A) and (B)]

80. Paragraphs 1 through 57 are realleged and incorporated by reference herein.
81. OCZ violated Section 13(b)(2)(A) of the Exchange Act [15 U.S.C. §
78m(b)(2)(A)], by failing to make or keep books, records and accounts that in reasonable detail
accurately and fairly reflected its transactions and disposition of its assets.  OCZ violated Section
13(b)(2)(B) of the Exchange Act [15 U.S.C. § 78m(b)(2)(B)], by failing to devise and maintain a
system of internal accounting controls sufficient to provide reasonable assurances that
transactions were recorded as necessary to permit preparation of financial statements in
conformity with GAAP and to maintain accountability of assets.
82. Petersen, by engaging in the conduct described above, knowingly or recklessly
provided substantial assistance to OCZ’s violation of Sections 13(b)(2)(A) and 13(b)(2)(B) of the
Exchange Act [15 U.S.C. §§ 78m(b)(2)(A) and 78m(b)(2)(B)].
83. By engaging in the conduct described above and pursuant to Section 20(e) of the
Exchange Act [15 U.S.C. § 78t(e)], Petersen aided and abetted OCZ’s violations, and unless

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enjoined will in the future aid and abet violations, of Sections 13(b)(2)(A) and 13(b)(2)(B) of the
Exchange Act [15 U.S.C. §§ 78m(b)(2)(A) and 78m(b)(2)(B)].
NINTH CLAIM FOR RELIEF

Failure to Reimburse: Section 304 of the Sarbanes-Oxley Act
[15 U.S.C. § 7243(a)]

84. Paragraphs 1 through 57 are realleged and incorporated by reference herein.
85. Section 304(a) of the Sarbanes-Oxley Act [15 U.S.C. § 7243(a)] requires the CEO
of an issuer that is required to prepare an accounting restatement due to the material
noncompliance of the issuer, as a result of misconduct, with any financial reporting requirement
under the securities laws, to reimburse the issuer for any bonus or other incentive-based or
equity-based compensation they received during the 12-month period following the first public
issuance or filing of the financial document embodying such financial reporting requirement and
any profits realized from the sale of the issuer’s stock during the 12-month period.
86. OCZ was required to prepare an accounting restatement as a result of misconduct.
87. Petersen has not reimbursed OCZ for the profits realized from the sale of OCZ’s
stock and the bonus that he received or obtained during the statutory time periods established by
section 304(a) of Sarbanes-Oxley [15 U.S.C. § 7243(a)].
88. The Commission has not exempted Petersen, pursuant to Section 304(b) of the
Sarbanes-Oxley Act [15 U.S.C. § 7243(b)], from the application of Section 304(a) of the
Sarbanes-Oxley Act [15 U.S.C. § 7243(a)].
89. By reason of the foregoing, Petersen has not complied with Section 304(a) of
Sarbanes-Oxley [15 U.S.C. § 7243(a)].

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PRAYER FOR RELIEF
WHEREFORE, the Commission respectfully requests that the Court:
A. Permanently enjoin Petersen from (i) violating Section 17(a) of the Securities Act
[15 U.S.C. § 77q(a)], Sections 10(b) and 13(b)(5) of the Exchange Act [15 U.S.C. §§ 78j(b) and
78m(b)(5)], and Exchange Act Rules Rule 10b-5, 13a-14, 13b2-1, and 13b2-2 [17 C.F.R. §§
240.10b-5, 240.13a-14, 240.13b2-1 and 240.13b2-2]; and (ii) aiding and abetting violations of
Exchange Act Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) [15 U.S.C. §§ 78m(a), 78m(b)(2)(A)
and (B)] and Exchange Act Rules 12b-20, 13a-1, 13a-11, and 13a-13 [17 C.F.R. §§ 240.12b-20,
240.13a-1, 240.13a-11 and 240.13a-13];
B. Order that Petersen disgorge his ill-gotten gains obtained as a result of the
violations alleged in this Complaint, with prejudgment interest;
C. Order that Petersen pay civil money penalties pursuant to Section 20(d) of the
Securities Act [15 U.S.C. § 77t(d)] and Section 21(d) of the Exchange Act [15 U.S.C. § 78u(d)]
in an amount to be determined by the Court, plus post-judgment interest;
D. Order that Petersen, pursuant to Section 304(a) of the Sarbanes-Oxley Act [15
U.S.C. § 7243(a)], pay the amount of any bonus and other incentive-based or equity-based
compensation he received from OCZ and profits he realized from the sale of OCZ stock during
the relevant statutory time period;
E. Order that Petersen is barred from acting as an officer or director of any issuer
that has a class of securities registered pursuant to Exchange Act Section 12 [15 U.S.C. § 78l], or
that is required to file reports pursuant to Exchange Act Section 15(d) [15 U.S.C. § 78o(d)]; and
F. Grant such further relief as the Court may deem just and appropriate.

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REQUEST FOR JURY TRIAL

The Commission hereby demands a jury trial.

Date:   October 6, 2015      /s/ Kevin Lombardi
      Kevin Lombardi, Trial Attorney
      District of Columbia Bar No. 474114
      Division of Enforcement
      Securities and Exchange Commission
      100 F Street, N.E.
      Washington, D.C. 20549
      Tel:  (202) 551-8753
      Fax: (202) 772-9291
      Email: [email protected]

Of Counsel:
Lisa Weinstein Deitch
California Bar No. 137492
Ian R. Dattner
New York Bar No. 4411187
Division of Enforcement
Securities and Exchange Commission

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KEVIN C. LOMBARDI (DC BAR NO. 474114) ([email protected]) 
IAN R. DATTNER (NY BAR NO. 4411187) ([email protected]) 
LISA WEINSTEIN DEITCH (CA BAR NO. 137492) ([email protected]) 

 
Attorneys for Plaintiff 
SECURITIES AND EXCHANGE COMMISSION 
100 F Street, NE 
Washington, DC 20549 
Telephone:  (202) 551-8753 (Lombardi) 
Facsimile:  (202) 772-9291 (Lombardi) 

 
 
 
 

UNITED STATES DISTRICT COURT 
 

NORTHERN DISTRICT OF CALIFORNIA 
 

SAN JOSE DIVISION 
 
 

 
 The Securities and Exchange Commission (“Commission”) alleges as follows for its 

complaint against defendant Ryan Petersen (“Petersen”):  

SUMMARY OF ALLEGATIONS 

1. This action concerns an accounting fraud orchestrated by Ryan Petersen at OCZ 

Technology Group, Inc. (“OCZ”), a now-bankrupt company that sold computer memory storage 

and power supply devices primarily to distributors, e-tailers, and original equipment 

manufacturers. 

SECURITIES AND EXCHANGE COMMISSION, 
 
  Plaintiff, 
 
 v. 
 
RYAN PETERSEN, 
 
  Defendant. 
 

 
 
 
COMPLAINT 
 
 
DEMAND FOR JURY TRIAL 

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2. Petersen was OCZ’s CEO from the time he founded OCZ in 2002 until he was 

forced to resign in September 2012.  Petersen promoted OCZ to investors as a company that had 

experienced, and was positioned to experience, significant revenue and gross margin growth.  At 

the time he did so, however, Petersen was engaged in a multi-faceted scheme to materially 

inflate these metrics.  The scheme included (1) mischaracterizing sales discounts as marketing 

expenses, (2) channel-stuffing OCZ’s largest customer to improperly inflate revenues, and 

(3) concealing customer product returns so that those returns would not be recorded in OCZ’s 

books and records or financial statements.   

3. First, to misclassify sales discounts as marketing expenses, Petersen implemented 

a program called “customer based programs” or “CBPs,” which were purportedly for the purpose 

of providing funding to customers for short-term marketing programs.  Customers received this 

funding in the form of credits to the customers’ accounts.  In contrast to a legitimate marketing 

program, however, Petersen used CBPs as a mechanism to disguise sales discounts, which 

reduce net revenues, as marketing expenses, which are reported as operating expenses and do not 

affect revenues.  Among other things, Petersen personally negotiated and directed others to 

negotiate CBP credits that were, in truth, sales discounts.  Petersen’s scheme caused OCZ to 

recognize tens of millions of dollars as marketing expenses that should have been recorded as 

revenue reductions. 

4. Second, Petersen engaged in channel stuffing with OCZ’s largest customer – that 

is, shipping more goods to the customer than it could sell in the normal course of business.  

Although Petersen was informed that the customer could not pay for the products already in its 

inventory, he continued to ship products to the customer so that OCZ could increase its reported 

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revenues.  He also repeatedly provided CBP credits to the customer in order to reduce the price 

of the OCZ products sitting in its inventory. 

5. Finally, Petersen concealed large product returns – including one for nearly 

$3.5 million in mid-2012 – from OCZ’s finance department and OCZ’s auditor.  Petersen 

instructed employees not to process certain returns and asked that one of the returns be made to 

“disappear.”  He then lied about the returns to members of OCZ’s finance department and OCZ’s 

auditor.  As a result of Petersen’s actions, the returns were not recorded in OCZ’s books and 

records or its financial statements. 

6. Petersen signed and certified the accuracy of financial statements from the third 

quarter of fiscal 2011 through the first quarter of fiscal 2013,1 although he knew, or was reckless 

in not knowing, that the filings contained materially false or misleading statements.  Petersen 

also made material misstatements in OCZ’s press releases concerning its quarterly and annual 

financial results from the third quarter of fiscal 2011 through the first quarter of fiscal 2013. 

7. The picture that Petersen portrayed of OCZ’s operations and financial condition 

to investors was a far cry from its true operational and financial condition.  Based largely on this 

false and misleading information, OCZ raised over $200 million from investors from 2010 

through 2012.   

8. Petersen personally profited from his misstatements by, among other things, 

selling shares of OCZ stock and receiving a bonus during the period when OCZ’s financial 

results were improperly inflated in public filings.  

                                                           
1  OCZ’s fiscal year ended at the end of the month of February.  Accordingly, the third 
fiscal quarter of 2011 consisted of the three months ending November 30, 2010, and the first 
fiscal quarter of 2013 consisted of the three months ending May 31, 2012. 

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9. By engaging in the conduct described in this Complaint, Petersen violated the 

anti-fraud provisions of Section 17(a) of the Securities Act of 1933 (“Securities Act”) [15 U.S.C. 

§ 77q(a)] and Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934 (“Exchange 

Act”) [15 U.S.C. § 78j(b) and 17 C.F.R. § 240.10b-5]; the internal controls and books and records 

provisions of Section 13(b)(5) of the Exchange Act [15 U.S.C. § 78m(b)(5)] and Exchange Act 

Rules 13b2-1 [17 C.F.R. § 240.13b2-1]; the lying to accountants provision of Exchange Act Rule 

13b2-2 [17 C.F.R. §240.13b2-2]; the certification provision of Exchange Act Rule 13a-14 

[17 C.F.R. § 240.13a-14]; and the clawback provision of Section 304 of the Sarbanes-Oxley Act 

of 2002 (“Sarbanes-Oxley”) [15 U.S.C. § 7243(a)] and aided and abetted OCZ’s violations of the 

reporting, books and records, and internal controls provisions of Sections 13(a) and 13(b)(2)(A) 

and 13(b)(2)(B) of the Exchange Act [15 U.S.C. §§ 78m(a), 78m(b)(2)(A) and 78m(b)(2)(B)] 

and Exchange Act Rules 12b-20, 13a-1, 13a-11, and 13a-13 [17 C.F.R. §§ 240.12b-20, 240.13a-

1, 240.13a-11 and 240.13a-13]. 

10. The Commission seeks an order enjoining Petersen from future violations of the 

above provisions of the Securities Act and Exchange Act, requiring him to disgorge his ill-gotten 

gains with prejudgment interest and pay appropriate civil money penalties, requiring him to 

forfeit any bonus, incentive based compensation or stock sales profits received during the 

relevant period and imposing upon him an officer and director bar. 

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JURISDICTION AND VENUE 

11. This Court has jurisdiction over this action pursuant to Sections 20 and 22 of the 

Securities Act [15 U.S.C. §§ 77t and 77v] and Sections 21 and 27 of the Exchange Act [15 

U.S.C. §§ 78u and 78aa]. 

12. Venue is proper in this judicial district pursuant to Section 22 of the Securities 

Act [15 U.S.C. § 77v(a)] and Section 27 of the Exchange Act [15 U.S.C. § 78aa] because certain 

of the acts and omissions constituting violations alleged herein occurred in this judicial district. 

13. Intradistrict Assignment.  Assignment to the San Jose Division is appropriate 

pursuant to Civil L.R. 3-2(c) and (e) because a substantial part of the events or omissions giving 

rise to the Commission’s claims occurred in the County of Santa Clara.  

14. Petersen, directly and indirectly, made use of the mails and of the means and 

instrumentalities of interstate commerce in connection with the acts, practices, and courses of 

business described in this Complaint. 

DEFENDANT 

15. Ryan Petersen, age 40, founded OCZ and was its CEO from 2002 until he was 

forced to resign in September 2012.  In 2012, OCZ disclosed in publicly-filed documents that, 

prior to founding OCZ, Petersen pled guilty or was convicted of crimes for conduct including 

theft, selling stolen property, and forging a check.  Petersen moved to Panama shortly after his 

forced resignation from OCZ.  Upon information and belief, Petersen currently resides in 

Panama.   

RELEVANT ENTITY 

16. OCZ was a Delaware corporation formed in 2002 that was headquartered in San 

Jose, California.  OCZ sold computer memory storage and power supply devices primarily to 

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distributors, e-tailers, and original equipment manufacturers.  Shares of OCZ’s stock traded on 

the AIM Market of the London Stock Exchange plc from June 2006 through April 2009.  OCZ’s 

common stock was traded on the OTCBB from February 10, 2010 to April 22, 2010, when it 

began trading on the NASDAQ Capital Market.  OCZ filed for bankruptcy in December 2013.  

On February 24, 2014, OCZ’s common stock was de-listed from NASDAQ.  On April 16, 2015, 

the Commission issued an Order Instituting Proceedings, Making Findings, and Revoking 

Registration of Securities Pursuant to Section 12(j) of the Securities Exchange Act of 1934.  

OCZ has liquidated its assets and is no longer operating. 

FACTS 

Background 

17. Petersen founded OCZ in 2002.  Although the company had engaged in a number 

of computer-related businesses since its founding, from approximately 2008 through its 

dissolution, OCZ primarily focused up selling solid state drives (“SSDs”), a new generation of 

computer storage drives that OCZ promoted as being superior to traditional hard drives.  OCZ 

sought to capitalize on the expected growth of the SSD market.   

18. Statements made to investors in certain filings with the Commission, which were 

signed by Petersen, and statements that Petersen made to investors in press releases, which were 

attached to Commission filings, emphasized OCZ’s past, and expected future, revenue growth 

and gross margin improvements.  OCZ provided guidance concerning revenues and gross 

margins, and securities analysts focused on these metrics.   

19. Petersen emphasized to OCZ employees the importance of achieving revenue and 

gross margin targets.  For example, in a May 3, 2012 email, Petersen instructed OCZ’s Vice 

President of Purchasing, “we must find a way to report nasty high [ma]rgins.”  A few days later, 

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on May 7, 2012, Petersen asked this executive:  “What other creative margin enhancements can 

we make[?]”  On May 28, 2012, Petersen wrote to two executives, “If we miss our targets here it 

will be disastrous.”  And on May 30, 2012, the day before quarter-end, Petersen emailed the 

executives, “If we miss our revenue number you may have misunderstood but they will be 

replacin[g] management.” 

20. Petersen’s emphasis on OCZ’s revenue and gross margin growth in marketing 

OCZ to investors was successful.  OCZ raised over $200 million from investors from 2010 

through 2012 through equity offerings.  Much of this capital was raised through registration 

statements that incorporated false and misleading financial statements.  

21. In late 2011, OCZ began negotiating with another technology company about the 

possible sale of OCZ.  Revenue growth and gross margin improvements were important metrics 

to the potential acquiring company.  Negotiations temporarily ceased, but started once again in 

the Spring of 2012.  In June 2012, Petersen emailed OCZ’s former CFO, “[i]f we don’t have 

numbers that look reasonable on a high revenue raise and good Gross profit margins for q1 we 

will be lucky to trade over cash value and I am sure they will withdraw their offer completely.” 

22. During the time period when Petersen was promoting the company to investors 

and trying to sell the company by focusing on revenue and gross margin growth, he was engaged 

in a scheme to materially inflate these metrics, as described further below.   

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Mischaracterization of Sales Discounts as Marketing 

23. In 2010, Petersen instituted a program that he called “customer based programs” 

or “CBPs,” pursuant to which OCZ would purportedly offer short-term marketing programs to its 

customers.  OCZ would pay for the purported marketing by providing credits to its customers. 

24. Historically, in addition to offering marketing funding to customers, OCZ had 

provided customers with several types of sales discounts commonly used within the industry, 

including instant rebates, price protection, and volume incentive rebates.  OCZ properly recorded 

these sales discounts as reductions to revenue.  CBPs, by contrast, were recorded as marketing 

expenses in OCZ’s books and records and on its financial statements.  Therefore, unlike other 

sales discounts, OCZ did not reduce its net revenues or gross margins when it issued CBP 

credits.  

25. Beginning in at least September 2010, Petersen instructed employees to 

characterize sales discounts provided to customers as CBPs—regardless of whether customers 

would provide any marketing, whether the value of any marketing provided was equal to the 

funding given by OCZ, or whether the credits were contingent upon future sales of OCZ 

products. 

26. Petersen directly negotiated deals with certain customers where sales discounts 

were classified as CBPs.  For example, in one instant message to a customer, Petersen agreed 

that the customer could purchase product at an effective price of $52 per solid state drive “after 

CBP,” but requested that the purchase order indicate a price of $60 per drive.  In another 

instance, Petersen asked a customer about his pricing of three products “after CBP,” indicating 

that the CBP credits had been provided to bring down the price of a product—not for marketing 

purposes.  Likewise, Petersen emailed a customer offering nearly $277,000 in CBP credits in 

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connection with a proposed purchase of OCZ products without referencing any marketing that 

the customer would perform. 

27. Petersen actively concealed the CBP scheme.  Petersen instructed employees to 

complete marketing approval forms so as to falsely classify sales discounts as CBP credits within 

OCZ’s accounting records.  Petersen also instructed employees to use round-dollar amounts on 

the forms, which would be indicative of true marketing funding that was the product of 

independent negotiation and which further would hide the fact that the discount had been 

calculated on a per-unit basis.  On one occasion, he also instructed an employee to alter the dates 

on CBP documentation with respect to multiple customers after the documentation had been 

completed so that the CBP credits would be recorded in later time periods. 

28. In further concealment of the CBP scheme, Petersen reprimanded employees and 

customers for even mentioning sales discounts.  In December 2010, Petersen emailed one 

executive, “Be care[ful] with the word IR [instant rebate].  We call those all CBP where 

possible.”  In another instance where a salesperson suggested that OCZ offer a customer an 

instant rebate, Petersen responded, “why are you emailing around stuff that says IR [instant 

rebate] in it . . . WTF . . . you can never say that word ever!”  Similarly, in a 2012 email with a 

customer who referenced price protection, Petersen stated that OCZ does not offer price 

protection and suggested that the conversation be taken “offline.”   

29. CBP funding grew substantially between late 2010 and September 2012.  By 

mid-2012, virtually all discounts were classified as CBPs and reported as marketing expenses, 

rather than reductions to revenue. 

30. U.S. generally accepted accounting principles (“GAAP”) requires vendors, such 

as OCZ, to record sales discounts as reductions to revenue.  Doing so, in turn, reduces gross 

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profits.  Specifically, where the vendor provides consideration, such as a marketing credit, to a 

customer, the vendor must reduce revenue by the amount of that consideration unless two criteria 

are met:  (1) the vendor receives an identifiable benefit for consideration that could have been 

obtained from a party other than the purchaser of the product; and (2) the vendor can reasonably 

estimate the fair value of the benefit.  See Accounting Standards Codification (“ASC”) 605-50-

45.  Petersen understood, or was reckless in not understanding, these requirements before he 

instituted and executed the CBP scheme.  

31. Petersen also understood, or was reckless in not understanding, the effect that 

misclassifying discounts as marketing expenses had on OCZ’s financial statements.  He received 

numerous analyses indicating that sales discounts affected OCZ’s revenues and gross profits, 

whereas CBP expenses were recorded “below the line”—i.e., did not affect revenues or gross 

profits.  

32. Petersen’s scheme to mischaracterize sales discounts as marketing expenses 

resulted in OCZ reporting materially inflated revenues and gross profits in its periodic reports 

from the quarter ending November 30, 2010 through the quarter ending May 31, 2012.   

Channel Stuffing OCZ’s Largest Customer  

33. OCZ’s largest customer in 2012 and the first quarter of 2013 was a German 

distributor (“German Distributor”).  German Distributor accounted for approximately 10% of 

OCZ’s sales in 2012 and approximately 17% of OCZ’s sales in the first quarter of 2013.  

Petersen personally conducted OCZ’s negotiations with German Distributor. 

34. Petersen’s negotiations resulted in shipments of OCZ product to German 

Distributor in advance of any commercially reasonable demand for those products, i.e., channel-

stuffing.  OCZ’s recognition of revenues for most of these shipments was improper under GAAP 

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and was inconsistent with OCZ’s own revenue recognition policy set forth in its annual reports, 

which Petersen signed and certified. 

35. Under GAAP, revenue must be realized or realizable and earned before it can be 

recognized.  Consistent with these requirements, OCZ’s revenue recognition policy provided, 

among other things, that it recognized revenue when, among other things, (1) the terms are fixed, 

and (2) collection is probable.   

36. Petersen knew that OCZ’s prices were not fixed for products sold to German 

Distributor.  Petersen repeatedly promised German Distributor that he would offer German 

Distributor discounts characterized as CBPs to reduce German Distributor’s carrying cost for 

OCZ products.  Petersen provided German Distributor with millions of dollars in discounts 

mischaracterized as CBP funding to bring down German Distributor’s costs on an ongoing basis.  

Petersen instructed an employee to provide false information to an OCZ accountant about the 

amount of CBP credits that he had promised to German Distributor. 

37. Petersen also knew that collectability was not probable for products sold to 

German Distributor.  German Distributor’s owner indicated in multiple emails to Petersen that it 

could not pay for the OCZ inventory that it had in stock.  As early as October 2011, German 

Distributor’s owner sent Petersen an email with the subject line “PROBLEMS,” noting that he 

and Petersen had agreed to “payment after sellout.”  Petersen responded that German Distributor 

should blow out the product below cost and he would make it up to German Distributor later.  In 

December 2011, German Distributor’s owner emailed that he had “Stock Problems” and 

requested that Petersen help him out.  The warnings about German Distributor’s inventory levels 

grew increasingly dire over time.  In late May 2012, German Distributor’s owner emailed 

Petersen that he had “too many OCZ in Stock…I need your help” and sent a separate email 

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approximately one week later stating, “I am dead---too many OCZ stock.”  In June 2012, 

German Distributor’s owner emailed Petersen, “I am in fear…seriously.”   

38. As German Distributor’s outstanding balance grew, Petersen forbade others at 

OCZ from dealing directly with German Distributor and lied about the reasons for German 

Distributor’s growing balance.   

39. The repeated CBP credits issued to German Distributor and the stated concerns of 

German Distributor’s owner about the distributor’s ability to pay for OCZ’s products should 

have precluded revenue recognition for purported sales to German Distributor.  Petersen knew or 

was reckless in not knowing that sales to German Distributor failed to comply with GAAP or 

OCZ’s revenue recognition criteria. 

40. As a result of OCZ’s channel stuffing, which was directed by Petersen, OCZ 

reported materially inflated revenues and gross profits in its periodic reports from the quarter 

ending February 29, 2012 through the quarter ending May 31, 2012.   

Concealing Product Returns 

41. Petersen also directed OCZ employees not to process or record a number of 

significant product returns from customers.  

42. In one instance, a Chinese distributor (“Chinese Distributor”) returned 

approximately $1 million of product to OCZ’s Taiwan warehouse in late December 2011, after 

Petersen failed in his efforts to convince Chinese Distributor not to return the product.  Petersen 

subsequently took steps to hide the return from OCZ’s finance department and its auditor.   

43. Petersen first instructed an employee that the return should not be processed.  

Petersen received an email confirming that his instruction had been followed.  Then, after several 

months of hiding the return, i.e., failing to record the product as inventory in OCZ’s records, 

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Petersen told employees to make the returned product disappear.  At around the time he gave that 

instruction, Petersen informed an employee that if OCZ recorded the return, it would have to 

restate prior financials.  Petersen’s instructions were carried out:  a truck driver in Taiwan picked 

up the products on or about May 24, 2012 without paying for the product.  At the time, OCZ 

failed to reduce its revenues or to increase its inventory for the amount of the product return. 

44. Separately, during the third quarter of fiscal 2012, a large distributor made one of 

the largest purchases in OCZ’s history.  The distributor, however, had difficulty selling the 

products it purchased.  In late May 2012, Petersen agreed to accept a return of nearly $3.5 

million worth of product in exchange for the distributor’s agreement to purchase a similar 

amount of product before the end of the first quarter of fiscal 2013.   

45. Petersen requested that the distributor wait to return the product until sometime in 

June 2012—in other words, after the end of the quarter on May 31, 2012.  Petersen subsequently 

authorized an employee to issue a document memorializing the authorization of the return to be 

sent to the customer.  When the distributor attempted to return the goods in approximately late 

June 2012, however, Petersen told OCZ’s finance department that he had rejected the return.  

The goods were stored in a warehouse controlled by the freight company that had attempted to 

deliver the goods.   

46. As a result of Petersen’s conduct, OCZ did not record the return of the goods in 

its accounting records or its financial statements. 

47. After holding the returns for approximately one to two months at the warehouse, 

OCZ ultimately took the goods back after others at OCZ learned about the issue.   

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48. In addition to the returns described above, OCZ received several additional 

significant customer returns in approximately late May/early June 2012.  Petersen directed 

employees not to process the returns—which totaled over $575,000.   

49. Petersen’s instructions not to process the returns in May and June 2012 coincided 

with the ramp-up of negotiations and due diligence in connection with a potential merger/buyout. 

50. As a result of Petersen’s scheme not to record the product returns, OCZ reported 

materially inflated revenues and gross profits in the fourth quarter of 2012 and the first quarter 

of 2013.   

Petersen’s Scheme Comes To Light  

51. On September 5, 2012, OCZ announced that it would miss its revenue guidance 

for the second quarter of fiscal 2013.  On September 17, 2012, OCZ announced Petersen’s 

resignation as CEO and a director of the company.  Subsequently, on October 10, 2012, OCZ 

announced that it would delay the filing of its Form 10-Q for the second quarter of fiscal 2013 

and was reducing its revenue expectations for the quarter, primarily based on the revenue impact 

of “customer incentive programs . . . which the Company will be reporting as a material 

weakness.”  OCZ’s stock price plummeted following the September 5 and October 10 

announcements. 

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52. In October 2013, OCZ issued a restatement of its financial statements.  As 

reflected in the below table, in the period from the third quarter of 2011 through the first quarter 

of 2013, OCZ reduced revenues by nearly $99 million, reducing revenues by more than 48% in 

the quarter ending May 31, 2012:   

 

53. OCZ’s reduction of its gross profits as part of the restatement was even more 

dramatic, reducing gross profits by over $116 million from the third quarter of 2011 through the 

first quarter of 2013 as summarized in the following table: 

 

54. Less than two months after filing the restatement, OCZ filed for bankruptcy 

protection.  It has since liquidated all of its assets and is no longer operating. 

Net Revenues (000s)  

Quarter Ending As Filed Change Restatement % Overstated
11/30/2010 53,222       (622)                    52,600            1.2%

2/28/2011 64,566       (5,586)                58,980            9.5%
5/31/2011 73,794       (9,826)                63,968            15.4%
8/31/2011 78,454       (2,058)                76,396            2.7%

11/30/2011 103,084     (15,424)              87,660            17.6%
2/29/2012 110,442     (28,306)              82,136            34.5%
5/31/2012 113,620     (37,128)              76,492            48.5%

Totals 597,182     (98,950)              498,232         19.9%

Gross Profit (000s)  

Quarter Ending As Filed Change Restatement
11/30/2010 7,661           (4,310)           3,351              

2/28/2011 10,709         (4,940)           5,769              
5/31/2011 14,744         (9,135)           5,609              
8/31/2011 16,931         (10,104)         6,827              

11/30/2011 23,175         (22,164)         1,011              
2/29/2012 27,586         (28,823)         (1,237)            
5/31/2012 28,431         (36,836)         (8,405)            

Totals 129,237      (116,312)      12,925            

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Misrepresentations in Commission Filings And To OCZ’s Auditor 

55. Petersen’s actions, as described above, resulted in material misrepresentations in 

the following OCZ filings with the Commission: 

a. OCZ’s annual reports on Form 10-K for the years 2011 and 2012, each of 

which was signed and certified by Petersen; 

b. OCZ’s quarterly reports on Form 10-Q for the periods ending November 30, 

2010, May 31, 2011, August 31, 2011, November 30, 2011 and May 31, 2012, 

each of which was signed and certified by Petersen; 

c. OCZ’s current reports on Form 8-K, filed on July 10, 2012, May 1, 2012, 

January 9, 2012, October 5, 2011, July 6, 2011, May 3, 2011, and January 10, 

2011. 

d. OCZ’s Form S-8 dated December 22, 2010, which was signed by Petersen, 

and incorporated by reference one or more of the misstated financial 

statements; 

e. OCZ’s Form S-8 dated October 14, 2011, which was signed by Petersen, and 

incorporated by reference one or more of the misstated financial statements; 

f. OCZ’s Form S-3 dated December 1, 2011, which was signed by Petersen, and 

incorporated by reference one or more of the misstated financial statements. 

56. Petersen also falsely certified, in OCZ’s quarterly reports for the period ending 

November 30, 2010 through the period ending May 31, 2012 and in OCZ’s annual reports for 

2011 and 2012, that he reviewed each of the reports and that, among other things, (i) to the best 

of his knowledge the financial statements did not contain any untrue statement of a material fact 

or omit to state a material fact necessary to make the statements made, in light of the 

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circumstances under which such statements were made, not misleading with respect to the period 

covered by the reports; (ii) to the best of his knowledge the financial statements, and other 

financial information included in the reports, fairly presented in all material respects the financial 

condition, results of operations and cash flows of OCZ for the periods presented in the reports; 

and (iii) he had designed internal control over financial reporting, or caused such internal control 

over financial reporting to be designed, to provide reasonable assurance regarding the reliability 

of financial reporting and the preparation of financial statements for external purposes in 

accordance with generally accepted accounting principles. 

57. In management representation letters sent to OCZ’s auditor in connection with the 

periodic reports from the period ending November 30, 2010 through the period ending May 31, 

2012, and in management representation letters concerning certain registration statements during 

the period, Petersen falsely represented, among other things, that (i) he believed the financial 

statements conformed with GAAP; (ii) all financial and related data had been made available to 

the auditor; and (iii) he had no knowledge of fraud or suspected fraud involving management.   

FIRST CLAIM FOR RELIEF 

Fraud: Section 10(b) of the Exchange Act and Rule 10b-5  
[15 U.S.C. § 78j(b) and 17 C.F.R. § 240.10b-5] 

 
58. Paragraphs 1 through 57 are realleged and incorporated by reference herein. 

59. Petersen, by engaging in the conduct described above, directly or indirectly, in 

connection with the purchase or sale of a security, by the use of means or instrumentalities of 

interstate commerce, of the mails, or of the facilities of a national securities exchange, with 

scienter: 

a. employed devices, schemes, or artifices to defraud; 

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b. made untrue statements of a material fact or omitted to state a material fact 

necessary in order to make the statements made, in the light of the 

circumstances under which they were made, not misleading; and 

c. engaged in acts, practices, or courses of business which operated or would 

operate as a fraud or deceit upon other persons. 

60. By engaging in the conduct described above, Petersen violated, and unless 

restrained and enjoined will again violate, Section 10(b) of the Exchange Act [15 U.S.C. § 

78j(b)] and Rules 10b-5(a), (b), and (c) thereunder [17 C.F.R. §§ 240.10b-5(a), (b), and (c)]. 

SECOND CLAIM FOR RELIEF 

Fraud in the Offer or Sale of Securities: Section 17(a) of the Securities Act 
[15 U.S.C. § 77q(a)] 

 
61. Paragraphs 1 through 57 are realleged and incorporated by reference herein. 

62. Petersen, by engaging in the conduct described above, directly or indirectly, in 

connection with the purchase or sale of a security, by the use of means or instrumentalities of 

interstate commerce, of the mails, or of the facilities of a national securities exchange: 

a. knowingly or recklessly employed devices, schemes, or artifices to defraud; 

b. knowingly, recklessly or negligently obtained money or property by means of 

untrue statements of material fact or omissions to state a material fact 

necessary in order to make the statements made, in light of the circumstances 

under which they were made, not misleading; and 

c. knowingly, recklessly or negligently engaged in transactions, practices, or 

courses of business which operated or would operate as a fraud or deceit upon 

purchasers of securities. 

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63. By engaging in the conduct described above, Petersen violated, and unless 

restrained and enjoined will again violate, Sections 17(a)(1), (2), and (3) of the Securities Act [15 

U.S.C. §§ 77q(a)(1), (2), and (3)]. 

THIRD CLAIM FOR RELIEF 

Knowingly Falsifying Books, Records, or Accounts: Section 13(b)(5) of the Exchange Act 
[15 U.S.C. § 78m(b)(5)] 

 
64. Paragraphs 1 through 57 are realleged and incorporated by reference herein. 

65. Petersen, by engaging in the conduct described above, knowingly circumvented or 

knowingly failed to implement a system of internal accounting controls. 

66. By engaging in the conduct described above, Petersen violated, and unless 

restrained and enjoined will again violate, Section 13(b)(5) of the Exchange Act [15 U.S.C. § 

78m(b)(5)]. 

FOURTH CLAIM FOR RELIEF 

Falsified Books, Records, or Accounts: Rule 13b2-1 of the Exchange Act  
[17 C.F.R. § 240.13b2-1] 

 
67. Paragraphs 1 through 57 are realleged and incorporated by reference herein. 

68. Petersen, by engaging in the conduct described above, directly or indirectly, 

falsified or caused to be falsified OCZ’s books, records, and accounts subject to 

Section 13(b)(2)(A) of the Exchange Act [15 U.S.C. § 78m(b)(2)(A)].  

69. By engaging in the conduct described above, Petersen violated, and unless 

restrained and enjoined, will in the future violate Rule 13b2-1 of the Exchange Act [17 C.F.R. 

§ 240.13b2-1]. 

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FIFTH CLAIM FOR RELIEF 

Lying to Accountants: Rule 13b2-2 of the Exchange Act  
[17 C.F.R. § 240.13b2-2] 

 
70. Paragraphs 1 through 57 are realleged and incorporated by reference herein. 

71. Petersen, by engaging in the conduct described above, directly or indirectly: (a) 

made or caused to be made materially false or misleading statements to accountants; or (b) 

omitted to state, or caused another person to omit to state, material facts necessary in order to 

make statements made, in light of the circumstances under which such statements were made, 

not misleading, to accountants in connection with: (1) an audit, review or examination of the 

financial statements of the issuer required to be made; or (2) the preparation or filing of a 

document or report required to be filed with the SEC. 

72. By engaging in the conduct described above, Petersen violated, and unless 

restrained and enjoined will again violate, Rule 13b2-2 of the Exchange Act [17 C.F.R. § 

240.13b2-2]. 

SIXTH CLAIM FOR RELIEF 

False Certifications: Rule 13a-14 of the Exchange Act  
[17 C.F.R. § 240.13a-14] 

 
73. Paragraphs 1 through 57 are realleged and incorporated by reference herein. 

74. Petersen falsely certified in OCZ’s Forms 10-Q for the periods ended November 

30, 2010, May 31, August 31 and November 30, 2011 and May 31, 2012 and Forms 10-K for the 

periods ended February 28, 2011 and February 29, 2012 that, among other things, he reviewed 

each of the reports and that (i) to the best of his knowledge the financial statements did not 

contain any untrue statement of a material fact or omit to state a material fact necessary to make 

the statements made, in light of the circumstances under which such statements were made, not 

misleading with respect to the period covered by the reports; (ii) to the best of his knowledge the 

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financial statements, and other financial information included in the reports, fairly presented in 

all material respects the financial condition, results of operations and cash flows of OCZ for the 

periods presented in the reports; and (iii) he had designed internal control over financial 

reporting, or caused such internal control over financial reporting to be designed, to provide 

reasonable assurance regarding the reliability of financial reporting and the preparation of 

financial statements for external purposes in accordance with generally accepted accounting 

principles. 

75. By engaging in the conduct described above, Petersen violated and unless 

restrained and enjoined will in the future violate Rule 13a-14 of the Exchange Act [17 C.F.R. § 

240.13a-14]. 

SEVENTH CLAIM FOR RELIEF 

Reporting Violations: Aiding and Abetting OCZ’s Violations of Section 13(a) and Rules 
12b-20, 13a-1. 13a-11 and 13a-13 of the Exchange Act 

[15 U.S.C. § 78m(a) and 17 C.F.R. §§ 240.12b-20, 240.13a-1, 240.13a-11 and 240.13a-13] 

76. Paragraphs 1 through 57 are realleged and incorporated by reference herein.  

77. OCZ violated Section 13(a) of the Exchange Act [15 U.S.C. § 78m(a)], and 

Rules 12b-20, 13a-1, and 13a-13 thereunder [17 C.F.R. §§ 240.12b-20, 240.13a-1 and 

240.13a-13], by filing with the Commission materially false and misleading periodic reports, 

including annual and quarterly reports on Forms 10-K and 10-Q from the period ending 

November 30, 2010 through the period ending May 31, 2012.  OCZ also violated Rule 13a-11 of 

the Exchange Act [17 C.F.R. § 240.13a-11], by filing with the Commission false and misleading 

current reports on Forms 8-K reporting false and misleading financial results for the periods 

ending August 31, 2010 through May 31, 2012. 

78. Petersen, by engaging in the conduct described above, knowingly or recklessly 

provided substantial assistance to OCZ’s violation of Section 13(a) of the Exchange Act [15 

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U.S.C. § 78m(a)], and Rules 12b-20, 13a-1, 13a-11 and 13a-13 thereunder [17 C.F.R. §§ 

240.12b-20, 240.13a-1, 240.13a-11 and 240.13a-13]. 

79. By engaging in the conduct described above, and pursuant to Section 20(e) of the 

Exchange Act [15 U.S.C. § 78t(e)], Petersen aided and abetted OCZ’s violations, and unless 

restrained and enjoined will in the future aid and abet violations, of Section 13(a) of the 

Exchange Act [15 U.S.C. § 78m(a)], and Rules 12b-20, 13a-1, 13a-11, and 13a-13 thereunder 

[17 C.F.R. §§ 240.12b-20, 240.13a-1, 240.13a-11 and 240.13a-13]. 

EIGHTH CLAIM FOR RELIEF 
 

Internal Controls / Recordkeeping: Aiding and Abetting OCZ’s Violations of Section 
13(b)(2)(A) and (B) of the Exchange Act  

[15 U.S.C. §§ 78m(b)(2)(A) and (B)] 
 

80. Paragraphs 1 through 57 are realleged and incorporated by reference herein. 

81. OCZ violated Section 13(b)(2)(A) of the Exchange Act [15 U.S.C. § 

78m(b)(2)(A)], by failing to make or keep books, records and accounts that in reasonable detail 

accurately and fairly reflected its transactions and disposition of its assets.  OCZ violated Section 

13(b)(2)(B) of the Exchange Act [15 U.S.C. § 78m(b)(2)(B)], by failing to devise and maintain a 

system of internal accounting controls sufficient to provide reasonable assurances that 

transactions were recorded as necessary to permit preparation of financial statements in 

conformity with GAAP and to maintain accountability of assets. 

82. Petersen, by engaging in the conduct described above, knowingly or recklessly 

provided substantial assistance to OCZ’s violation of Sections 13(b)(2)(A) and 13(b)(2)(B) of the 

Exchange Act [15 U.S.C. §§ 78m(b)(2)(A) and 78m(b)(2)(B)]. 

83. By engaging in the conduct described above and pursuant to Section 20(e) of the 

Exchange Act [15 U.S.C. § 78t(e)], Petersen aided and abetted OCZ’s violations, and unless 

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enjoined will in the future aid and abet violations, of Sections 13(b)(2)(A) and 13(b)(2)(B) of the 

Exchange Act [15 U.S.C. §§ 78m(b)(2)(A) and 78m(b)(2)(B)]. 

NINTH CLAIM FOR RELIEF 
 

Failure to Reimburse: Section 304 of the Sarbanes-Oxley Act 
[15 U.S.C. § 7243(a)] 

 
84. Paragraphs 1 through 57 are realleged and incorporated by reference herein. 

85. Section 304(a) of the Sarbanes-Oxley Act [15 U.S.C. § 7243(a)] requires the CEO 

of an issuer that is required to prepare an accounting restatement due to the material 

noncompliance of the issuer, as a result of misconduct, with any financial reporting requirement 

under the securities laws, to reimburse the issuer for any bonus or other incentive-based or 

equity-based compensation they received during the 12-month period following the first public 

issuance or filing of the financial document embodying such financial reporting requirement and 

any profits realized from the sale of the issuer’s stock during the 12-month period. 

86. OCZ was required to prepare an accounting restatement as a result of misconduct. 

87. Petersen has not reimbursed OCZ for the profits realized from the sale of OCZ’s 

stock and the bonus that he received or obtained during the statutory time periods established by 

section 304(a) of Sarbanes-Oxley [15 U.S.C. § 7243(a)]. 

88. The Commission has not exempted Petersen, pursuant to Section 304(b) of the 

Sarbanes-Oxley Act [15 U.S.C. § 7243(b)], from the application of Section 304(a) of the 

Sarbanes-Oxley Act [15 U.S.C. § 7243(a)].  

89. By reason of the foregoing, Petersen has not complied with Section 304(a) of 

Sarbanes-Oxley [15 U.S.C. § 7243(a)]. 

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PRAYER FOR RELIEF 

WHEREFORE, the Commission respectfully requests that the Court: 

A. Permanently enjoin Petersen from (i) violating Section 17(a) of the Securities Act 

[15 U.S.C. § 77q(a)], Sections 10(b) and 13(b)(5) of the Exchange Act [15 U.S.C. §§ 78j(b) and 

78m(b)(5)], and Exchange Act Rules Rule 10b-5, 13a-14, 13b2-1, and 13b2-2 [17 C.F.R. §§ 

240.10b-5, 240.13a-14, 240.13b2-1 and 240.13b2-2]; and (ii) aiding and abetting violations of 

Exchange Act Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) [15 U.S.C. §§ 78m(a), 78m(b)(2)(A) 

and (B)] and Exchange Act Rules 12b-20, 13a-1, 13a-11, and 13a-13 [17 C.F.R. §§ 240.12b-20, 

240.13a-1, 240.13a-11 and 240.13a-13]; 

B. Order that Petersen disgorge his ill-gotten gains obtained as a result of the 

violations alleged in this Complaint, with prejudgment interest; 

C. Order that Petersen pay civil money penalties pursuant to Section 20(d) of the 

Securities Act [15 U.S.C. § 77t(d)] and Section 21(d) of the Exchange Act [15 U.S.C. § 78u(d)] 

in an amount to be determined by the Court, plus post-judgment interest; 

D. Order that Petersen, pursuant to Section 304(a) of the Sarbanes-Oxley Act [15 

U.S.C. § 7243(a)], pay the amount of any bonus and other incentive-based or equity-based 

compensation he received from OCZ and profits he realized from the sale of OCZ stock during 

the relevant statutory time period; 

E. Order that Petersen is barred from acting as an officer or director of any issuer 

that has a class of securities registered pursuant to Exchange Act Section 12 [15 U.S.C. § 78l], or 

that is required to file reports pursuant to Exchange Act Section 15(d) [15 U.S.C. § 78o(d)]; and 

F. Grant such further relief as the Court may deem just and appropriate. 

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REQUEST FOR JURY TRIAL 
 
The Commission hereby demands a jury trial. 

 
 
Date: October 6, 2015      /s/ Kevin Lombardi     
      Kevin Lombardi, Trial Attorney 
      District of Columbia Bar No. 474114 
      Division of Enforcement 
      Securities and Exchange Commission 
      100 F Street, N.E.   
      Washington, D.C. 20549 
      Tel:  (202) 551-8753 
      Fax: (202) 772-9291     
      Email: [email protected] 
 
Of Counsel: 
Lisa Weinstein Deitch  
California Bar No. 137492 
Ian R. Dattner  
New York Bar No. 4411187 
Division of Enforcement 
Securities and Exchange Commission 

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