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Hedge Fund Wannabes Busted for Trading on Illegal Amazon Tips

Image: Hedge Fund Wannabes Busted for Trading on Illegal Amazon Tips
(Alexey Novikov/Dreamstime)

Thursday, 07 September 2017 08:45 PM

Two men who had dreams of starting a hedge fund have been accused of taking an unfortunate shortcut to show they were top-notch traders: buying illegal tips from their friend at Amazon.com Inc.

Maziar Rezakhani and Sam Sadeghi of Washington state paid Amazon analyst Brett Kennedy $10,000 for nonpublic information on the online retailer’s 2015 first-quarter earnings, the U.S. Securities and Exchange Commission said in a Thursday statement. Their goal was to establish a successful track record so they could impress investors and start a New York hedge fund, the SEC said.

Rezakhani, 28, and Kennedy, 26, were members of the same college fraternity and have been friends since 2009. The illicit Amazon trades were made in a brokerage account controlled by Rezakhani, and resulted in $116,000 of profits. Before the Seattle-based company reported its earnings, Rezakhani had boasted on messaging boards that its “numbers are so obvious” and that a “5 year old can guess what they will do.”

“Rezakhani boasted on social media that he could accurately predict Amazon’s financial performance,” said Jina Choi, head of the SEC’s San Francisco office. “But he failed to predict that we would catch him and his accomplices in their illegal scheme.”

Serving Time

The SEC’s allegations may be the least of Rezakhani’s concerns, because he’s already serving a five-year prison term after pleading guilty to defrauding Apple Inc., the U.S. Internal Revenue Service, shipping companies and a small bank in a scheme in which he ordered iPhones for resale and then claimed they were stolen in transit. He was accused of using the scam to finance his lavish lifestyle and ordered to pay more than $3.5 million in restitution.

Kennedy, who’s facing criminal charges over the Amazon trades, agreed to pay more than $10,000 to settle the SEC case without admitting or denying the agency’s claims. Sadeghi, 28, also agreed to settle with the SEC without admitting or denying wrongdoing, paying more than $24,000.

Kennedy “exercised very poor judgment in this case but it was a one-time incident,” his attorney Chris Black, said in an emailed statement. “He has taken responsibility for his actions and looks forward to putting this chapter in his life behind him.”

The SEC said there was no known counsel for Rezakhani and Sadeghi.

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Two men who had dreams of starting a hedge fund have been accused of taking an unfortunate shortcut to show they were top-notch traders: buying illegal tips from their friend at Amazon.com Inc.
hedge, fund, amazon, trading, illegal, tips
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2017-45-07
Thursday, 07 September 2017 08:45 PM
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