The Securities and Exchange Commission (SEC) has charged a National Football League (NFL) professional football player and a former investment banker with insider trading in advance of corporate acquisitions facilitated through coded text messages and FaceTime conversations
The US regulator alleges that after meeting at a party, Mychal Kendricks, linebacker for the Cleveland Browns, began receiving illegal tips from Damilare Sonoiki, an analyst at an investment bank who had access to confidential, non-public information about upcoming corporate mergers. Kendricks allegedly made $1.2m (£920,000) in illegal profits by purchasing securities in companies that were soon to be acquired and then selling his positions after the deals were publicly announced, in one instance generating a nearly 400% return on his investment in just two week
According to the SEC, Kendricks rewarded Sonoiki for his tips and other assistance, which included setting up an online brokerage account that both men could access, by providing cash kickbacks, free NFL tickets, and an evening on the set of a pop star’s music video in which Kendricks made a cameo appearance.
Stephanie Avakian, co-director of the SEC enforcement division, said: ‘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.’
The SEC’s complaint, filed in federal district court in Philadelphia, charges Kendricks and Sonoiki with fraud and is seeking the return of their trading profits plus interest and penalties.
The US Attorney’s Office for the Eastern District of Pennsylvania has announced parallel criminal charges against Kendricks and Sonoiki.
In a statement, the Cleveland Browns team said: ‘Prior to signing Mychal, we were informed that there was a financial situation that he had been involved with in 2014. We were told Mychal had fully cooperated with investigators as a victim.
‘Recently, we were provided an update on the matter and the circumstances have changed. We are now dealing with a different set of facts and the additional information we have gathered has led us to the decision to release Mychal from our team. Due to the ongoing legal nature of this situation, we will have no further comments.’
Report by Pat Sweet
