Cleveland Browns’ Mychal Kendricks and Blackish Writer Damilare Sonoiki Charged with Insider Trading

Federal authorities announced Wednesday that Cleveland Browns linebacker Mychal Kendricks and Blackish writer Damilare Sonoiki have been indicted on insider trading charges.

According to the U.S. Attorney’s office in Philadelphia, Sonoiki, then a junior analyst at a global investment bank in New York, provided confidential information to Kendricks, then a linebacker for the Philadelphia Eagles, regarding upcoming mergers involving four tech companies that were clients Goldman.

No court appearances scheduled but “that will happen relatively shortly,” U.S. Attorney William McSwain said at a press conference Wednesday. If convicted, he said, both Kendricks and Sonoiki could face “substantial prison time.”

Here are the details of the case:

Relying on the material non-public information he received from Sonoiki, the information alleges that Kendricks purchased call options in the target companies, Compuware, Move, Sapient, and Oplink.  When the proposed merger was announced in each case, the value of Kendricks’s options went up significantly.  Based on the alleged insider trading related to Compuware, Mr. Kendricks made a purchase of approximately $60,000 in call option contracts, and after the public merger announcement, sold those same option contracts for approximately $138,000, which was a 130% increase.  With respect to Move, Mr. Kendricks made a purchase of approximately $71,000 and sold after the public merger announcement for approximately $350,000, which constituted a 393% increase.  For Sapient, Mr. Kendricks made a purchase of approximately $146,000 in call option contracts and sold them after the public merger announcement for approximately $635,000, which was a 335% increase.  Finally, with Oplink, Mr. Kendricks purchased the call option contracts for approximately $446,000 and sold them after the public merger announcement for approximately $798,000, which was a 79% increase from the purchase price.

Mr. Kendricks allegedly made a profit of approximately $78,000 from his Compuware investments, approximately $279,000 from Move, approximately $489,000 from Sapient, and approximately $352,000 from Oplink, for a total of approximately $1.2 million.  The information further alleges that defendant Kendricks provided defendant Sonoiki with tickets to Eagles games and approximately $10,000 in cash.

If convicted, Kendricks and Sonoiki face maximum possible sentence of 25 years’ imprisonment, a three-year period of supervised release, $5,250,000 fine, and a $200 special assessment.