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FalconStor CEO Resigns Under Mysterious Circumstances

Storage OEM-er FalconStor Software, which provides storage software to EMC, Oracle, Nexsan, SGI, Acer and Data Direct, among other companies, revealed in a very unclear press statement Sept. 29 that its CEO, ReiJane Huai, has resigned.

That he resigned is the only clear part.

The company then said that Huai made this decision "following his disclosure of certain alleged improper payments in connection with the company's contract with a customer."

And what the heck does that mean? Are we talking about under-the table "carrying charges?" From Huai to somebody else? From somebody else to Huai? From Huai to regulators? Was Huai paying off middlemen to obtain more business, or a former actress who had provided special services?

FalconStor Vice President and General Counsel Seth Horowitz answered eWEEK's e-mail query with a simple: "We have no comment other than what is in the press release." And that's precisely the problem, because no detail of what really happened to the chief executive of a prominent international storage company is explained.

Whatever happened, the news sent the already-suffering FalconStor stock price down as much as 34 percent -- from about $4 to $2.80, although the price did start to inch back up later in the day to around $3.20.

To help right the ship, FalconStor picked current Chief Strategy Officer James McNiel to be its interim CEO and said a special committee of the board will conduct an internal investigation.

The Melville, N.Y.-based company said it would cooperate with law enforcement authorities on the ongoing investigation, whatever it's about.

Chris Preimesberger

Chris J. Preimesberger

Chris J. Preimesberger is Editor-in-Chief of eWEEK and responsible for all the publication's coverage. In his 13 years and more than 4,000 articles at eWEEK, he has distinguished himself in reporting...