Resident Charged with $76K Insider Trading Scheme

The Securities and Exchange Commission has filed a complaint in federal court against Farzin Bazshushtari of Mission Viejo alleging insider trading.

Bazshushtari directs sales at a data storage company in Santa Ana.

The complaint alleges he purchased stock in his company, STEC, based on inside knowledge of his company three times between April and June 2009, in violation of both his company's policies and federal law.

As a result, Bazshushtari made over $76,000, according to the complaint.

In Aug. 2009, the same man set up a corporation in Mission Viejo called Baztech, Inc.

If convicted, the Mission Viejo resident could be required to pay back the money, and he could be prevented from future investing.

STEC has been publicly traded since 2000. Since 2004, the company has had an ethics code that prohibits trading in company stock during limited blackout periods. The complaint says Bazshushtari was sent an e-mail warning him and other employees that he was not allowed to trade after March 19, 2009.

During the blackout period, the complaint says, Bazshushtari learned about positive first-quarter sales from his superior, the vice president of sales at STEC.

On April 27, 2009, Bazshushtari bought 7,000 shares in STEC for about $66,000, the complaint says. That's 55 percent of his base annual salary of $120,000.

When the market closed May 11, 2009, STEC's stock had risen by about 31 percent. That means Bazshushtari made nearly $30,000 on the investment, according to the SEC.

Similar trades occured on two other occasions, the SEC alleges in its complaint.