Cleveland Browns linebacker Mychal Kendricks on Wednesday admitted to insider trading following the release of both criminal and civil fraud charges brought against him and a former investment banker, who was a friend of his.
Kendricks allegedly participated in the scheme while he was a member of the Philadelphia Eagles, which won Superbowl LII earlier this year. The Browns management has said he will not play in the game on Thursday. Kendricks has not officially pleaded guilty as yet. He said in a statement that he takes full responsibility for his wrongdoing and is cooperating with authorities.
Both the U.S. Attorney for the Eastern District of Pennsylvania and the Securities and Exchange Commission on Wednesday announced insider trading charges against Kendricks and Damilare Sonoiki of Beverly Hills, Calif., a former Goldman Sachs junior analyst who had access to confidential, nonpublic information about upcoming corporate mergers, the SEC said.
The complaint said the deals were arranged through coded messages and FaceTime conversations during 2014 and 2015 that the two thought could not be traced. Kendrick participated in at least four deals through which he made $1.2 million. He gave kickbacks and free Eagles tickets and other celebrity perks to Sonoiki as payment for the tips that companies were about to be sold, the complaint said.
Kendricks bought call options for Compuware, Move, Sapient and Oplink, the U.S. Attorney said, then sold them after the deals were announced to the public. In one case, he made nearly a 400 percent return on his money in two weeks, the SEC says.
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.
“When individuals engage in insider trading—buying and selling securities based on material, non-public information—it undermines faith in our financial markets and harms ordinary investors who do play by the rules,” U.S. Attorney William M. McSwain. “As alleged, Mr. Sonoiki and Mr. Kendricks cheated the market, cheated other investors, and placed themselves above the law.”