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SEC Charges Former Amazon Employee With Insider Trading

By NexChange
Capital Markets

The Securities and Exchange Commission has charged a former financial analyst for Amazon with allegedly leaking confidential information to his former fraternity brother ahead of the company’s earnings announcement so that the two could reap an illegal profit, the regulator announced on Thursday.

The SEC has alleged that Brett Kennedy had gained unauthorized access to nonpublic 2015 first quarter earnings information while working at Amazon. Kennedy then allegedly shared it with Maziar Rezakhani, his former fraternity brother, “who illegally traded on the financial results before their public release to make more than $116,000 in illicit profits.”

According to the SEC’s complaint, Rezakhani paid Kennedy $10,000 in cash for the tip and also shared the trading profits with Sam Sadeghi, who was advising him on his brokerage account trades and joined Rezakhani at a meeting with Kennedy to discuss the nonpublic information.  The SEC’s complaint alleges that Rezakhani and Sadeghi aimed to establish a successful track record with the trading in Rezakhani’s brokerage account and together open a hedge fund in New York that would accept investments from others.

Rezakhani then allegedly went on “at least two trading-related internet communication platforms” prior to Amazon’s earnings announcement, forecasting first quarter revenue of $22.7 billion and earnings per share of -$0.12. In his postings on the platforms Rezakhani boasted that the “numbers are so obvious” that a “5 year old can guess what they will do,” according to the SEC’s complaint.

“As alleged in our complaint, Rezakhani boasted on social media that he could accurately predict Amazon’s financial performance,” Jina L. Choi, Director of the SEC’s San Francisco Regional Office, said in a statement. “But he failed to predict that we would catch him and his accomplices in their illegal scheme.”

Sadeghi has agreed to pay disgorgement of $11,599.74 plus $1,035.39 in interest and an $11,599.74 penalty for a total of $24,214.87. The agreement, which is still pending court approval, is being done so without admitting or denying the allegations.

Kennedy agreed to pay disgorgement of $10,000 plus interest of $875.36. The U.S. Attorney’s Office for the Western District of Washington also announced criminal charges against Kennedy.

Photo: Getty iStock

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