Securities Fraud Charges Announced Today Against Former Junior Analyst for Major Investment Bank and Current NFL Player
PHILADELPHIA – United States Attorney William M. McSwain announced Damilare Sonoiki, 27, of Beverly Hills, California, and Marvin Mychal Kendricks, 27, of Fresno, California were charged today by information with insider trading.
According to the information, from July 2014 to approximately March 2015, Sonoiki and Kendricks conspired together to commit securities fraud. Sonoiki, then a junior analyst at a global investment bank in New York, provided material non-public information to Kendricks, then a linebacker for the Philadelphia Eagles, regarding upcoming mergers involving four investment bank clients of the global investment bank. Sonoiki obtained and used this information in violation of his duty of confidentiality that he owed to the investment bank.
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.
“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,” said U.S. Attorney McSwain. “As alleged, Mr. Sonoiki and Mr. Kendricks cheated the market, cheated other investors, and placed themselves above the law. My Office will continue to work with our law enforcement partners to maintain the integrity of the financial markets, which is one of our top priorities.”
“At the heart of insider trading cases is the concept of a level playing field,” said Christian Zajac, Assistant Special Agent in Charge of the FBI’s Philadelphia Division. “Investors bet on individual stocks, based on public knowledge of a company’s past performance and future plans. As alleged, Mychal Kendricks used material non-public information, provided by his co-defendant, to score significant profits from expected market moves. That’s not merely gaming the system—that’s a federal crime. Insider trading has long posed a threat to U.S. financial markets, because it compromises the public’s trust that our markets operate fairly. For that reason, the FBI takes seriously our responsibility to investigate insider trading and other significant financial crimes.”
If convicted, each defendant faces a maximum possible sentence of 25 years’ imprisonment, a three-year period of supervised release, $5,250,000 fine, and a $200 special assessment. Forfeiture of all proceeds from the offenses also may be ordered.
The case was investigated by the Federal Bureau of Investigation and is being prosecuted by Assistant United States Attorney David J. Ignall. The U.S. Attorney’s Office also would like to thank the Securities and Exchange Commission for their assistance in this matter.
An indictment, information, or criminal complaint is an accusation. A defendant is presumed innocent unless and until proven guilty.