Public Information on Financial Results in Exchange for Cash

A former financial analyst at Amazon.com, Inc. has plead guilty in U.S. District Court in Seattle to securities fraud involving insider trading. Brett D. Kennedy, 26, currently of Blaine, Washington, admitted that in April 2015, he provided non-public quarterly financial results to a friend who then purchased Amazon stock and sold it at a profit once the results were made public. The friend paid Kennedy for this inside information. Kennedy is no longer employed by Amazon. Chief U.S. District Judge Ricardo Martinez scheduled sentencing for December 8, 2017.

According to the information filed in the case, Kennedy began work as a financial analyst at Amazon in 2013. As part of his employment he signed a confidentiality statement that he would not disclose Amazon’s non-public financial information outside the company. The policy specifically mentions information such as earnings and losses as material confidential information. In April 2015,Kennedy used his access to view and write down Amazon first quarter earnings that were going to be announced later in the month. Kennedy provided this information to his friend. After viewing the information, the friend purchased 4400 shares of Amazon stock for $1.7 million. When the positive earnings news was announced publicly, and the stock price rose, the friend sold the shares for a gain of nearly $116,000.

The friend paid Kennedy $10,000 in cash for the information.

As part of the plea agreement, the government will recommend Kennedy serve no more than a year and a day in prison. However, the judge is not bound by that recommendation and Kennedy could be sentenced to the maximum penalty of up to 20 years in prison and $5 million fine.

The Securities and Exchange Commission has filed civil charges against Kennedy. In its complaint it identifies the friend as Maziar Rezakhani, and names him as a defendant. Rezakhani, 28, is currently serving a five year prison term for defrauding a bank, Apple, Inc., and various shipping and insurance companies. The insider trading investigation grew out of the investigation into Rezakhani’s frauds. The SEC is seeking disgorgement of all profits from Rezakhani’s alleged illegal trading. Kennedy agreed to a settlement with the SEC.   back...
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