Browns Don’t Lose, But a Player Does

For the first time in 13 years, the Cleveland Brown did not lose on their NFL opening weekend. Being the Browns, they didn’t win either. They had to compete without the help of Mychal Kendricks. The now former linebacker was cut by the Browns after charges of insider trading.

The $1.2 million in insider trading profits cost Kendricks $3.5 million from his Browns contract. Plus he faces a significant civil penalty from the SEC, Plus, the US Attorney’s Office in Philadelphia decided to bring criminal charges which could result in jail time.

Why did Kendricks do this? In the complaint, the SEC published a text message from Kendricks to Damilare Sonoiki.

I’m at a messed up place as far as my money is concerned I have enough money to live and to support myself but not enough money to avoid taxes … I don’t have enough money to buy a business and get the tax breaks I need.

How did they do this? Sonoiki worked at investment bank. It’s unnamed in the complaint, but based on the transactions it looks like it was Goldman Sachs. Sonoiki met Kendricks at a party. Sonoiki got information on M&A deals from work and passed them on to Kendricks. Kendricks gave him football tickets and cash in exchange for the inside information.

How did they get caught? Kendricks opened a trading account, but tried to have Sonoiki make the trades directly.  The firm flagged the account for having a mismatched IP address. Then the trades were just options with big short-term gains. I’m sure the brokerage account flagged the account and alerted the SEC.

It’s a very brazen case of insider trading. The only question is why it took so long to get caught.

Sources:

Author: Doug Cornelius

You can find out more about Doug on the About Doug page

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