SEC Charges Stec’s Sales Director With Insider Trading
Farzin Bazshushtari agreed to pay $153,353.
This is a Press Release edited by StorageNewsletter.com on January 19, 2012 at 2:54 pmThe Securities and Exchange Commission issued the
following litigation release: The SEC charged a sales director at Santa
Ana, CA-based data storage manufacturer STEC Inc. with
insider trading in company securities based on non-public information he
learned on the job.
The SEC’s complaint filed on January 13, 2012 in the U.S. District Court
for the Central District of California, alleges that Farzin
Bazshushtari, who lives in Mission Viejo and is STEC’s Director of
Industrial Distribution, purchased 7,000 STEC shares on April 27, 2009,
after learning about STEC’s positive first quarter financial results.
When those results were announced publicly on May 11, STEC’s stock price
jumped 30 percent.
The SEC further alleges that Bazshushtari purchased another 5,500 shares
on May 27, 2009, after seeing internal weekly sales reports indicating
that STEC would outperform second quarter guidance. He additionally
purchased 200 STEC call options on June 10. When the company publicly
increased second quarter revenue guidance on June 16 to reflect the
surging sales, STEC’s stock price jumped 26 percent.
According to the SEC’s complaint, Bazshushtari made total profits of
$76,676.50 by trading on inside information. Bazshushtari knew that he
violated company policies when he placed the trades. His April 27
purchase was made during a ‘blackout’ period when STEC employees were
prohibited from trading in company stock. He purchased STEC call options
despite STEC employees being prohibited from trading in STEC options,
which give holders the right to buy or sell shares in the future.
Bazshushtari further violated STEC’s written insider trading and ethics
policies when he traded on margin and held his STEC securities in a
margin account.
Bazshushtari agreed to settle the SEC’s charges by paying $76,676.50 in
disgorgement and a $76,676.50 penalty. Bazshushtari also has consented
without admitting or denying the SEC’s allegations to a permanent
injunction from further violations of Section 10(b) of the Securities
Exchange Act of 1934 and Rule 10b-5 thereunder.
Note:
Farzin Bazshushtari has been employed by Stec since February 1996 and
has been the director of industrial distribution in its sales department
since mid-2007. He resides in Mission Viejo, CA.