By: Eddie Greenblat, fall 2018 IAC Student Intern
Mychal Kendricks was on top of the World. He helped the Philadelphia Eagles beat the New England Patriots in Super Bowl LII. For me, a lifelong hater of the Patriots, it was a joyous moment. Mychal Kendricks is out of the NFL after the U.S. Attorney brought insider trading charges against him.
Kendricks and Damilare Sonoiki, a former Goldman Sachs analyst, were indicted by the U.S. Attorney and charged the by the Securities Exchange Commission. The SEC defines insider trading as “buying or selling a security, in breach of a fiduciary duty or relationship of trust and confidence, on the basis of material, nonpublic information about the security.”
U.S. Attorney William M. McSwain publicly alleged that Kendricks and Sonoiki committed securities fraud from July 2014 to March 2015. Sonoiki allegedly passed information to Kendricks involving upcoming mergers, which violated Sonoiki’s duty of confidentiality to Goldman Sachs. Kendricks used the information Sonoiki gave him to increase his initial investments of $723,000 to 1.2 million dollars.
Some might ask why this type of activity is such a big deal? Nobody was hurt and nothing bad happened. But the U.S. Attorney does not see it that way. The government sees insider trading as cheating the system. Christian Zajac, a FBI agent that investigated Kendricks, said “insider trading has long posed a threat to U.S. Financial markets, because it compromises the public’s trust our markets operate fairly.”
I strongly agree with Agent Zajac. Ordinary investors need to feel like they are on the same playing field as every other investor. If investors don’t believe they have access to the same information as everyone else, they will stop investing. In addition, because a NFL player pled guilty to insider trading makes the issue more public and could prevent more ordinary people from investing.