A 50-year-old Mission Viejo man charged by the Securities and Exchange Commission with insider trading has agreed to pay more than $150,000 in penalties and surrendered profits to resolve the matter, the SEC announced.
According to the complaint filed Friday in federal court, the SEC alleges sales director Farzin Bazshushtari of Santa Ana data storage manufacturer STEC, Inc. bought company shares during employee blackout dates and just before favorable financial results came out that boosted stock prices and the value of his portfolio.
Bazshushtari learned STEC was about to come out with positive first quarter results when he bought 7,000 shares in the company on April 27, 2009, according to the SEC complaint, which notes that when those results were announced on May 11, STEC's stock price shot up 30 percent.
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He pulled the same thing again on May 27, 2009, when he purchased another 5,500 shares after seeing weekly internal sales reports indicating that STEC would outperform second quarter guidance, the SEC charges. Six days after Bazshushtari bought 200 STEC call options, the company on June 16, 2009, publicly increased second quarter revenue guidance to reflect surging sales, causing the stock price to shoot up another 26 percent, the complaint adds.
All tolled, Bazshushtari's moves earned him a nifty $76,676.50 in profits, despite his knowing that he violated company policies when he placed the trades, alleges the SEC, which points to the April 27 purchase having been made during a "blackout" period when STEC employees were prohibited from trading in company stock. If anyone would know that, surely the sales director would.
The $76,676.50 penalty Bazshushtari agreed to pay to settle the SEC's charges equals the amount in profits he also had to surrender. He also consented without admitting or denying the SEC's allegations to a permanent injunction from further insider trading violations.
Read the complaint HERE.