Hedge Fund Wannabes Busted for Trading on Illegal Amazon Tips

An employee prints a branded label at the Amazon.com Inc. fulfillment center in Hemel Hempstead, U.K., on Wednesday, Nov. 25, 2015. Wal-Mart and Amazon's toy pricing was almost equal on a three-week average leading into the holiday season, as both companies continue to provide the most competitive prices in the marketplace. Photographer: Chris Ratcliffe/Bloomberg
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.”