Prosecutors said Brett Kennedy’s former UW fraternity brother, Maziar Rezakhani, made stock trades based on the information Kennedy provided, quickly profited $116,000, then paid Kennedy $10,000 in cash for the tip.
A former financial analyst at Amazon pleaded guilty to an insider-trading charge Thursday, admitting in court he tipped off a college friend to details about the company’s forthcoming first-quarter earnings report in spring 2015 — information the friend used to make a quick $116,000.
Brett D. Kennedy, 26, of Blaine, Whatcom County, resigned from Amazon in May. Prosecutors said that his former fraternity brother at the University of Washington, Maziar Rezakhani, made stock trades based on the information Kennedy provided, quickly profited $116,000, then paid Kennedy $10,000 in cash for the tip.
The insider-trading scheme came to light as investigators were looking into a separate, $3 million fraud by Rezakhani, for which he is serving five years in federal prison.
In that case, Rezakhani, 28, who had been running a business selling iPhones overseas, falsely claimed a shipment of more than 1,200 iPhones had been stolen. He persuaded credit-card companies to reverse his charges for the phones, then sold the phones through his business. He also submitted false tax and bank records to obtain a multimillion-dollar line of credit from a local bank, which he spent largely on a luxury penthouse and cars.
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Kennedy had been working as a financial analyst at Amazon since 2013. His lawyer, Chris Black, wrote in an email to The Associated Press that his client was “little more than a kid” at the time, and that he has cooperated fully with the FBI and the Securities and Exchange Commission.
“He exercised very poor judgment in this case but it was a one-time incident; he has never engaged in any other remotely similar conduct,” Black wrote. “He has taken responsibility for his actions and looks forward to putting this chapter in his life behind him.”
Prosecutors agreed to recommend no more than one year in prison for Kennedy when he is sentenced in December, but he could face up to a maximum of 20 years.
“Insider trading of any kind corrodes trust in one of the crown jewels of our country — our financial markets,” Seattle U.S. Attorney Annette Hayes said in a written statement.
The SEC on Thursday sued Kennedy, Rezakhani and a trading partner of Rezakhani, Sam Sadeghi, 28, over the insider trading. The complaint said Rezakhani and Sadeghi were trying to establish a successful track record with the trading in Rezakhani’s brokerage account so they could open a hedge fund in New York.
“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.”
In a settlement with the agency, Kennedy agreed to pay close to $11,000. Sadeghi will pay more than $24,000.
At his plea hearing Thursday, Kennedy’s lawyer described him as a part-time professional gambler and sought permission for him to be allowed to continue gambling while is on release before his sentencing. U.S. Magistrate Judge Mary Alice Theiler denied the request.