The Securities and Exchange Commission Wednesday charged Cleveland Browns linebacker Mychal Kendricks and a former Wall Street analyst, Damilare Sonoiki, with insider trading.
In a statement, Mr. Kendricks admitted wrongdoing, said he cooperated with investigators and promised to pay back illegal profits.
"I apologize," he said in the statement released by his attorneys. "Four years ago, I participated in insider trading, and I deeply regret it. While I didn't fully understand all of the details of the illegal trades, I knew it was wrong, and I wholeheartedly regret my actions."
The
SEC alleges that Mr. Kendricks, who played for Super Bowl champion Philadelphia Eagles from 2012 through last season, received illegal tips about pending corporate mergers between July 2014 and November 2014 from Mr. Sonoiki, who worked at a large New York investment bank that was involved in the transactions. The firm was not named in the SEC order but was revealed by Mr. Kenricks to be
Goldman Sachs.
The SEC alleged that Mr. Kendricks made a total profit of approximately $1.2 million by buying shares of at least four companies that were about to be acquired and then selling the shares after the sales were announced. It also alleged that Mr. Kendricks paid Mr. Sonoiki $10,000 in the form of cash kickbacks and free NFL game tickets.
In addition, Mr. Kendricks introduced Mr. Sonoiki to pop singer Teyana Taylor on the set of a music video in which Mr. Kendricks made a cameo.
The SEC, which filed suit in Philadelphia federal court, is seeking the disgorgement of Mr. Kendricks' and Mr. Sonoiki's illegal trading profits as well as prejudgment interest and penalities.
"As we alleged in our complaint, [Mr.] 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," Stephanie Avakian, co-director of the SEC Division of Enforcement,
said in a statement.
The Browns said that Mr. Kendricks will not accompany the team to its preseason game in Detroit Thursday.
"We are aware of the situation and in communication with the league office as we gather more information," the
Browns said in a statement posted on Twitter. "We will comment further at the appropriate time."
The scheme began after Mr. Kendricks met Mr. Sonoiki at a party in 2013, according to the SEC. Mr. Kendricks would eventually rue the encounter.
"I invested money with a former friend of mine, who I thought I could
trust and who I greatly admired," Mr. Kendricks said in his statement. "His background as a Harvard graduate and employee of Goldman Sachs gave me a false sense of confidence."
The two perpetrators tried to hide their communications by using coded text messages and FaceTime, according to the SEC. At one point, Mr. Kendricks was worried a deal would fall through.
"I'm getting scared Bruh," he texted to Mr. Sonoiki.
Mr. Sonoiki responded: "Bro, don't get scared."
A few days later, Mr. Kendricks was still nervous.
"I'm getting kind if-y Bruh…Bruh idk," he texted to Mr. Sonoiki.
Mr. Sonoiki is now a writer in the television industry, according to published reports.
