Cleveland Browns linebacker Mychal Kendricks was charged by the Securities and Exchange Commission Wednesday with insider trading in advance of corporate acquisitions facilitated through coded text messages and FaceTime conversations with a former investment banker, who was also charged.
The SEC alleges in its complaint that after meeting at a party, Kendricks began receiving illegal tips from Damilare Sonoiki, an analyst at an investment bank who had access to confidential, nonpublic information about upcoming corporate mergers.
According to the complaint, from July 2014 through November 2014, Sonoiki tipped Kendticks about at least four corporate acquisitions that the investment bank was advising in advance of those deals being announced to the public.
Based on these tips, the former Philadelphia Eagles linebacker Kendricks “purchased the securities of the companies that were about to be acquired and made approximately $1.2 million in illegal profits,” in one instance generating a nearly 400% return on his investment in just two weeks, the complaint states.
The SEC’s complaint, filed in federal district court in Philadelphia, charges Kendricks and Sonoiki with fraud and is seeking the return of their ill-gotten trading profits plus interest and penalties.
The U.S. Attorney’s Office for the Eastern District of Pennsylvania announced parallel criminal charges the same day against Kendricks and Sonoiki.
Kendricks also compensated Sonoiki by providing him with free tickets to Eagles games, by paying for a luxury car service to drive Sonoiki approximately 180 miles to attend a nightclub event in York, Pennsylvania, and by inviting Sonoiki to the set of pop star Teyana Taylor’s music video, in which Kendricks made a cameo appearance, the complaint states.
Kendricks, 27, currently resides in Philadelphia and Cleveland. He signed a one year contract with the Cleveland Browns on June 5. Sonoiki, also 27, lives in California.
“As alleged in our complaint, Kendricks paid cash and shared celebrity perks for illegal tips that enabled him to trade and profit on confidential information that the rest of the investing public didn’t have,” said Stephanie Avakian, co-director of the SEC Enforcement Division.
“Kendricks and Sonoiki allegedly tried to evade detection by using a variety of communication methods to hide their misconduct, but we were able to use methodical investigative work to piece together a trail of evidence and expose their insider trading scheme,” added Joseph Sansone, chief of the SEC Enforcement Division’s Market Abuse Unit.
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