SEC v. Marvin Mychal-Christopher Kendricks; and Damilare Sonoiki, No. 2:18-cv-03695, Eastern District of Pennsylvania (Sept. 27, 2022) — Complaint

IN THE UNITED STATES DISTRICT COURT Y,/,,-
FOR THE EASTERN DISTRICT OF PENNSYLVANIA ~
SECURITIES AND EXCHANGE COMMISSION,
Plaintiff,
v.
MARVIN MYCHAL-CHRISTOPHER KENDRICKS,
a/k/a "Mychal Kendricks," and
DAMILARE SONOIKI,
Defendants.
COMPLAINT
Civil No:
1s
Plaintiff Securities and Exchange Commission (the "Commission") files this Complaint
against defendants Marvin Mychal-Clnistopher Kendricks ("Kendricks") and Damilare
Sonoiki ("Sonoiki") (collectively, "Defendants") and alleges
as follows:
SUMMARY OF THE ACTION
1. This matter involves multiple instances of insider trading by Kendricks, a fonner
linebacker for the Philadelphia Eagles
of the National Football League, and Sonoiki, a fonner
investment banking analyst at a large investment bank (the "Investment Bank"). From July
2014 through November 2014, Sonoiki tipped Kendticks about at  least four corporate
acquisitions that the Investment Bank was advising in advance
of those deals being announced
to the public. Based on these tips, Kendricks purchased the securities
of the companies that
were about to
be acquired and made approximately $1.2 million in illegal profits.
2. Defendants used a variety of methods to conceal their communications.
Kendricks and Sonoiki attempted to minimize telephone calls, employed coded language in
text messages, and used other methods
of communication that they apparently believed would
not
be uncovered, such as FaceTime. Kendricks gave cash kickbacks to Sonoiki for providing /
the illegal tips. Kendricks also compensated Sonoiki
by providing him with free tickets to ~

Eagles games, by paying for a luxury car service to drive Sonoiki approximately 180 miles to
attend a nightclub event in Yark, Pennsylvania, and by inviting Sonoiki to the set
of pop star
Teyana Taylor's music video, in which Kendricks made a cameo appearance.
3. As a result
of the conduct described in this complaint, Defendants violated
Sections lO(b) and 14(e)
of the Securities Exchange Act of 1934 ("Exchange Act") [15 U.S.C.
§§ 78j(b), 78n(e)] and Rules l0b-5 and 14e-3 thereunder [17 C.F.R. §§ 240.1 0b-5, 240.14e-3].
NATURE OF THE PROCEEDINGS AND REQUESTED RELIEF
4. The Commission brings this action pursuant to Section 21 ( d) of the Exchange Act
[15 U.S.C. § 78u(d)].
5. The Commission seeks permanent injunctions against Defendants enjoining them
from engaging in the transactions, acts, practices, and courses
of business alleged in this
Complaint, disgorgement
of all ill-gotten gains together with prejudgment interest, and civil
penalties pursuant to Section 21A
of the Exchange Act [15 U.S.C. § 78u-1]. The Commission
finiher seeks any other relief
as the Cami may deem just and appropriate. [15 U.S.C. §
78u(d)(5)]
JURISDICTION AND VENUE
6. This Court has jurisdiction over this action pursuant to Sections 21 ( d) and ( e),
21A, and 27
of the Exchange Act [15 U.S.C. §§ 78u(d) and (e), 78u-1, and 78aa].
7. Venue in this District is  proper pursuant to Section 2l(d) and 27 of the Exchange
Act
[15 U.S.C. §§ 78u(d), 78u-l, and 78aa]. Among other things, certain of the acts, practices,
and courses
of business constituting the violations of the federal securities laws alleged herein
occmTed within the Eastern District
of Pennsylvania, including the opening of a trading
account for Kendricks, illegal trading in that account, and kickback payments to Sonoiki. In
addition, Kendricks resides in this District.
2

THE DEFENDANTS
8. Kendricks, age 27, currently resides in Philadelphia, Pennsylvania and
Cleveland, Ohio. From 2012 to 2018, Kendricks was a linebacker for the Philadelphia Eagles
of the National Football League.
9. Sonoiki, age 27, lives in California. From approximately June 2013 through June
2015, Sonoiki lived in New York City and worked
as an analyst in the Technology, Media, and
Telecommunications ("TMT") group
of the Investment Bank's investment banking division.
While at the Investment Bank, Sonoiki held a Series 79 license
as a registered investment
banking representative.
RELEVANT ENTITIES
10. Investment Bank, a large investment banking, securities, and investment
management finn, is  headquaiiered in New York, New York.
11. Sonoiki tipped Kendricks mate1ial nonpublic infmmation about transactions
advised
by the Investment Bank, including transactions involving the four publicly-traded
companies identified below whose common stock was registered with the Commission
pursuant to Section 12(b)
of the Exchange Act.
12.
Compuware Corporation ("Compuware") was, at  all relevant times, a
Michigan corporation headquaiiered in Detroit that manufactured computer software.
Compuware's common stock was traded on NASDAQ under the ticker symbol "CPWR." On
September 2, 2014, Compuware announced that it was being acquired by the private-equity
finn Thoma Bravo LLC ("Thoma Bravo") in a going-private transaction. The Investment
Bank advised Compuware
in connection with the transaction.
13. Move, Inc. ("Move") was, at  all relevant times, a Delaware corporation
headquartered in Westlake Village, California that operated realtor.com and other real estate­
related websites. Move's common stock was traded on NASDAQ under the ticker symbol
"MOVE." On September 30, 2014, Move announced that it was being acquired
by News
3

Corporation ("News Corp") in a cash tender offer. The Investment Bank advised News Corp
in connection with the transaction.
14.
Sapient Corporation ("Sapient") was, at all relevant times, a digital advertising
finn incorporated in Delaware and headquartered in Boston, Massachusetts. Sapient's
common stock was traded on NASDAQ under the ticker symbol "SAPE."  On November 3,
2014, Sapient announced that it was being acquired
by the French adve1iising finn Publicis
Groupe PLC ("Publicis") in a cash tender offer. The Investment Bank advised Sapient
in
connection with the transaction.
15.
Oplink Communications, Inc. ("Oplink") was, at all relevant times, a
manufacturer
of optical communications equipment incorporated in Delaware and
headquartered in Fremont, California. Oplink was traded on NASDAQ under the ticker
symbol "OPLK." On November 19, 2014, Oplink announced that it was being acquired
by a
subsidiary
of Koch Industries, Inc. ("Koch") in a cash tender offer. The Investment Bank
advised Koch in connection with the transaction.
FACTS
A. Sonoiki's Access to Material Nonpublic Information and the Investment
Bank's Policies
16. In July 2013, Sonoiki joined the Investment Bank as an analyst in the investment
banking division's
TMT group. As an analyst, Sonoiki had access to material nonpublic
information about pending business transactions being advised
by the TMT group.
17. All personnel
of the Investment Bank were subject to an internal compliance
policy entitled, "Policies Regarding the Safeguarding
of Confidential Information: the Chinese
Wall and Other Infonnation Barriers" ("Investment Bank Confidential Information Policy"),
which explicitly stated:
"[ w Je regularly receive confidential infonnation as part of our nonnal
client relationships. To breach a confidence or to use confidential information improperly or
carelessly would
be unthinkable."
4

18. The Investment Bank Confidential Information Policy prohibited finn employees
from trading on the basis
of material nonpublic information obtained in the course of their
work:
Confidential infonnation is infonnation that
is not publicly available ...
The finn takes any misuse, misappropriation, or improper
dissemination
of confidential infonnation seriously. Misuse and
misappropriation
of confidential information can violate contractual
obligations, laws, rules, or regulations in various jurisdictions in which
the firm does business and give rise
to both civil liabilities and
criminal penalties for the finn and for individual employees ...
An employee who
is aware of material nonpublic infonnation about an
issuer or its securities
is prohibited from:
buying or selling the issuer's securities in personal (including
certain related persons'), client, or finn accounts.
-directing, soliciting, inducing, encouraging, or recommending the
purchase or sale
of those securities.
19. All persom1el of the Investment Bank were also subject to an internal compliance
policy entitled, "Personal Trading" ("Personal Trading Policy"), which generally prohibited
employees from holding outside brokerage accounts. And even in those limited circumstances
where an outside account was pennitted, the Investment Bank personnel had
to disclose the
outside account and also pre-clear all trades with the Investment Bank. The Personal Trading
Policy further stated that trading by employees must "comply with all relevant regnlations,
including, but not limited to, those regarding insider trading and manipulative practices[.]"
20. All
of the Investment Bank's employees were provided with training on the
Investment Bank Confidential Infonnation Policy and Personal Trading Policy.
5

B.
21.
Kendricks and Sonoiki Hatch the Insider Trading Scheme
In late 2013, Kendricks met Sonoiki at a party. After that first meeting, Sonoiki
and Kendricks stayed in contact and exchanged investment and business ideas over the phone.
During the summer
of 2014, Sonoiki began providing material nonpublic infonnation about
Investment Bank-advised deals to Kendricks. In return, Sonoiki received cash and other
kickbacks from Kendricks.
C.
Sonoiki Tips Kendricks Information in Advance of Four Deal
Announcements
1. Insider Trading in Compuware
22. In 2013, Compuware retained the Investment Bank to explore a variety of
strategic alternatives for the company. By May 2014, the Investment Bank was actively
involved in discussions with the private-equity finn Thoma Bravo about a potential transaction.
23. In or around early July 2014, Sonoiki learned that the Investment Bank's TMT
group was advising Compuware on a proposed transaction in which Thoma Bravo would take
the company private.
24. On July 14, 2014, Sonoiki texted Kendricks to tell him he had infonnation they
could trade on:
July
14 3:01 pm
July 14 5:17 pm
July 14 5:22 pm
Sonoiki to Kendricks: hit
my line soon as you
can
... Got something for us
Kendricks to Sonoiki: Yo i might head out
there tonight
Sonoiki to Kendricks: cool even better
if we
talk in person. got u
25. Within hours
of receiving Sonoiki's texts, Kend1icks traveled to New York City,
and met Sonoiki during the early hours
of July 15, 2014, outside the Investment Bank's
downtown Manhattan headquarters.
6

26. On July 18, 2014, Kendricks paid $850 for a luxmy car service to drive Sonoiki
approximately 180 miles from New York City to York, Pennsylvania so that Sonoiki could
attend a nightclub event hosted
by Kendricks. After the event, Sonoiki and Kendticks went to
Kendricks' apartment in Philadelphia.
27. Early the next morning, July 19, 2014, while Sonoiki was still at Kendricks'
apartment, a brokerage account (the "Kendricks Account") was opened in Kend1icks' name at
an online brokerage finn (the "Brokerage Finn").
Half an hour later, a note was created in
Kendricks' phone containing Compuware's ticker symbol "CPWR."
28. The following week, Kendricks funded the Kendricks Account with $80,000 from
a managed account that he held at another brokerage finn. In an apparent attempt to avoid
questions from his financial advisor who managed the account, Kendricks moved the money
from his managed account to a checking account and only then to the Kendricks Account.
29. When the money arrived in the Kendricks Account, Kendricks and Sonoiki used
coded language in text messages to discuss it:
July 26 7:39 a.m.
July 26 7:00 p.m.
July 26 7:42 p.m.
Kendricks to Sonoiki: Yo so the 80 is  there
Sonoiki to Kendricks: nah you should keep number 95
[the number on Kendricks' football jersey]
Kendricks to Sonoiki: They said I couldn't get the 80 anyways
only
WR could get that number
30. During the last few days
of July 2014, the Investment Bank's work on the
transaction to take Compuware private intensified. On July 29, the TMT team working
on the
deal provided a timeline to Thoma Bravo that contemplated a mid-August public
announcement
of the deal. That evening, Kendricks met Sonoiki outside the Investment
Bank's lower Manhattan office, and the two spent the evening on the set of a Teyana Taylor
7

music video in which Kendricks made a cameo appearance.
31. The next day, July 30, 2014, from his apmtment in New York
City's financial
district, Sonoiki purchased 1,000 Compuware call options with September expiration dates at a
cost
of approximately $22,000 in the Kendricks Account.
32. A call option contract gives the owner the right to buy a specified amount
of an
underlying stock at a specified price (the "strike price"), before a specified date (the
"expiration date"). The expiration date for all stock options expiring in a given month
generally occurs on the third Friday
of that month. A call option becomes more valuable as the
price
of the underlying stock increases relative to the strike price. A person who buys a call
option typically believes that the value
of the underlying stock will go up, and a person who
buys a call option with a short-tenn expiration typically believes that the value
of the
underlying stock will
go up in the short tenn.
33. On August 1 and August 5, 2014, following numerous phone calls to Kendricks,
Sonoiki, who was in New York City, purchased 1,400 Compuware call options with September
expiration dates at a cost
of approximately $30,000 in the Kendricks Account.
34. On August 5, 2014, the Brokerage Firm notified Kendricks
by e-mail that it had
observed trading in the Kendricks Account from an internet protocol ("IP") address in
New
York City, suggesting that an unauthorized third-pmty might have access to his account.
35. On August 15, 2014, in New York City, Sonoiki purchased 150 Compuware call
options with November expiration dates at a cost
of approximately $8,000 in the Kendricks
Account.
36. By late August, the impending transaction still had not been announced.
Kendricks and Sonoiki exchanged a series
of text messages in which Kendricks expressed
concern about the trading and Sonoiki attempted to assuage Kendricks' fears:
August 23
11 :09 p.m. Kendricks to Sonoiki: I'm getting scared Bruh
August 23
11: 16 p.m. Sonoiki to Kend1icks: bro, don't get scared
8

August 27 I 0:44 a.m. Sonoiki to Kendricks: ear hustling hard, let's link up or hop on
the phone
August
27 2:14 p.m. Kendricks to Sonoiki: I'm getting kind if-y Bruh ... Bruh idk
August
27 2:18 p.m. Sonoiki to Kendricks: I hear u. it's still happening, just taking
longer than it was supposed
to
August 27 6:38 p.m. Kendricks to Sonoiki: I'm losing Bruh
August
27 6:38 p.m. Sonoiki to Kendricks: chill, not losing
August
28 12:28 a.m. Kendricks to 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
August
31 6:34 p.m. Sonoiki to Kendricks: Haha .. .I should have some good news
for you really soon.
August
31 6:41 p.m. Sonoiki to Kendricks: ... don't wony really soon ... that's all I
can say ...
August
31 6:41 p.m. Kendricks to Sonoiki: ... got my hopes all up
37. Late on the evening
of Monday, September 1, 2014 (Labor Day), the Wall Street
Journal published an article rep01iing that Compuware was in advanced talks with a private­
equity buyer about a going-private transaction and that a deal announcement was imminent.
38. Early the following morning, Tuesday, September 2, 2014 at 7:22 a.m., Sonoiki
sent a text message
to a colleague at the Investment Bank who was working on the Compuware
deal, which the bank had code-named Copper: "congrats on copper btw, just saw it hit the
journal. What's the price?" His colleague responded: "Thank
you! $10.92 ~25% premium."
39. Later on September 2, 2014, after the market opened, Compuware's stock price
rose sharply and closed at $10.59 per share, an approximately 13% increase over the closing
price on the prior trading day, Friday, August 29, 2014.
40. That same day, Sonoiki sold
all of the Compuware call options he had purchased
in the Kendricks Account.
In total, Sonoiki purchased Compuware call options in the
9

Kendricks Account at a cost of approximately $60,000 and sold them for approximately
$138,000, netting Kendricks a profit
of approximately $78,000.
41. The Defendants' illegal trading in Compuware options generated returns
of more
than 130% in a little over one month. On September 3, 2014, Kend1icks expressed his
satisfaction through a text message to Sonoiki telling him: "[y]ou the man."
42. Shortly after generating these illicit profits in the Kendricks Account, Sonoiki
began seeking compensation from Kendricks.
On September 4, 2014, Sonoiki sent a text
message to Kendricks asking Kend1icks to "hook [him] up" with Eagles tickets. Sonoiki
received the tickets the next day.
43. Also on September 4, 2014, Sonoiki sent a series
of text messages to Kend1icks in
which he used coded language to reference the kickbacks Kendricks had agreed to pay him:
"idk when next imma be able to see you ...
so try to have the bread if you can ... the bread in nyc
just
isn't the same and I really like my cheesesteaks with the stuff you all have in Philly."
44. As alleged in fmiher detail below, in late September and October 2014,
Kendricks paid Sonoiki cash kickbacks totaling approximately $10,000 in exchange for his
inside information.
2. Insider Trading in Move
45. By the first week of September 2014, the Investment Bank's TMT group was
advising News Corp in its acquisition
of the real-estate information company Move. The
Investment Bank team was involved
in late-stage negotiations, and expected a deal to be
announced imminently. By this point, both News Corp and Move had hired lawyers and
investment bankers, drafts
of the merger agreement had been exchanged, conditions to a
potential tender offer were being discussed between the paiiies, and the boards
of News Corp
10

and Move had met to evaluate the terms of the offer.
46. By September 4, 2014, a friend
ofSonoiki's at  the Investment Bank, who was
working on the Move deal, had learned that the transaction would be announced on September
8. On September 4, Sonoiki sent a text message to Kendricks: "call me asap."
47. The Defendants took steps to minimize written communications: on September 5,
Kendricks sent a text message to Sonoiki with a reminder:
"don't write." Sonoiki responded
"can you Facetime on your laptop I know." They also exchanged approximately 19 phone
calls on September 4 and
5.
48. On Friday, September 5, 2014, Kendricks called the Brokerage Finn in response
to the earlier inquiries the finn had made about third-party access to the Kendricks Account.
Because Kendricks had not responded timely to the Brokerage
Finn's inquiries, the finn had
placed a block on the account. Desperate to get the hold lifted, Kendricks told a Brokerage
Finn representative on a recorded call: "I am trying get [the block] lifted before the market
closes ... ! really need to do that."
49. After Kendricks told the Brokerage Finn that he would be the only person with
access to the Kendricks Account, the firm lifted the hold. The next trading day, Monday,
September 8, 2014, the Kendricks Account purchased 224 Move call options with September
and October expiration dates at  a cost
of approximately $20,000.
50. From this point forward, Kendricks, who was in the midst
of the NFL football
season, enlisted a friend (the "Middleman") to place trades in the Kendricks Account using
Kendricks' computer. Kendricks authorized and encouraged the Middleman to act on his
behalf and trade for him based on tips from Sonoiki. On September 15, 2014, Kendricks texted
the Middleman: "[d]elegation has been passed on to you," and, on September 21: "stop being
11

so scared of [Sonoiki] ... yeah it's all good ... Just talk to him."
51. After Kendricks had enlisted the Middleman to assist him, Kendricks still
remained involved in the scheme. Sonoiki sometimes called Kendricks directly, and the
Middleman updated Kendricks when he had received new information from Sonoiki and when
he was planning to trade on it.
52. On or around September 15, 2014, the Investment Bank team working on the
Move transaction learned that the deal would be announced soon. On September 15, Sonoiki,
Kendricks, and the Middleman exchanged calls, and the Kendricks Account purchased 67
Move call options with October expiration dates at a cost
of approximately $9,000. The next
day, September 16, the Kendiicks Account sold Move call options that were about to expire,
and then purchased an additional 50 Move call options with October expiration dates at  a cost
of approximately $5,000. On September 17, the Kendricks Account purchased 32 additional
Move call options with October expiration dates at a cost
of approximately $3,000.
53. On September 19, 2014, Sonoiki sent Kendricks a text message asking whether
Kendricks could "hook [him] up with tix for [S]unday," whether he could see Kendricks on
Sunday, and whether he could collect an "envelope" from Kendricks. That Sunday, Sonoiki
and a friend attended the Eagles game against the Washington Redskins using tickets
Kendricks provided to Sonoiki. After the game, Kendricks paid Sonoiki approximately $6,000
in cash.
54. On September 23, 2014, the Investment Bank team working on the Move
transaction learned that the new target date for an announcement
of the deal was the following
Monday, September 30. Later that day, the Kendricks Account purchased 330 Move call
options with October and November 2014 expiration dates at a cost
of approximately $33,000.
12

55. On September 30, 2014, before the market opened, News Corp and Move
announced that News Corp would acquire all outstanding Move shares in a tender offer priced
at
$21 per share. Following the September 30 announcement, Move's stock price rose sharply
and closed at  $20.96, an increase
of approximately 3 7% over the stock's closing price of
$15.29 on September 29.
56. On October 2 and 3, 2014, the Move call options in the Kendricks Account were
sold. In total, the Kendricks Account purchased Move call options at a cost
of approximately
$71,000, and sold them for approximately $350,000, netting Kendricks a profit
of
approximately $279,000.
57. The Defendants' illegal trading in Move call options generated returns
of more
than 392% in less than one month.
3. Insider Trading in Sapient
58. By early October 2014, Sonoiki learned that the Investment Bank's TMT group
was advising Sapient regarding a potential tender offer
by Publicis to acquire the company. By
this time, both Sapient and Publicis had engaged investment bankers and lawyers, Publicis had
made a proposal to purchase Sapient in a tender offer, and senior managers
of the two
companies had met to discuss the offer, including the offer price.
59. During the first week
of October 2014, Sonoiki and the Middleman exchanged
more than 40 phone calls. Following the phone calls, on October 6 and
7, the Kendricks
Account purchased 1,523 Sapient call options with October 2014 and January 2015 expiration
dates at a cost
of approximately $93,000.
60. On October
7, 2014, Sonoiki sent a text message to Kendricks, asking for four
tickets to that Sunday's Eagles game. Sonoiki received the tickets from Kendricks, and, on
13

Sunday, October 12, used the tickets to attend the Eagles game against the New York Giants.
61. On October 9, 2014, the Kendricks Account purchased 36 Sapient call options
with October 2014 and January 2015 expiration dates at  a cost
of approximately $12,000. On
October 14, 2014, the Kend1icks Account sold Sapient call options that were about
to expire
and purchased another 185 Sapient call options with November 2014 expiration dates at a cost
of$41,000.
62. In or around mid-to late October 2014, Sonoiki took a train to Philadelphia to
pick up an additional cash kickback from Kendricks. Sonoiki met Kendricks and the
Middleman at  Philadelphia's 30th Street Station and received approximately $4,000 in cash.
63. On November 3, 2014, Sapient announced that Publicis had agreed to acquire the
company through a tender offer priced at  $25 per share, a significant premium to the
company's then-current stock price. That day, Sapient's stock ptice rose sharply and closed at
$24.60, an increase
of approximately 42% over the stock's closing price of $17.32 on October
31.
64. On November 6, the Sapient call options in the Kendricks Account were sold.
In
total, the Kendricks Account purchased Sapient call options at  a cost of approximately
$146,000 and sold them for approximately $635,000, netting Kendricks a profit
of
approximately $489,000.
65. The Defendants' illegal trading in Sapient call options generated returns of more
than 335% in approximately one month.
14

4. Insider Trading in Oplink
66. By late October 2014, Sonoiki learned that the Investment Bank's TMT Group
was advising Koch concerning a tender offer to acquire Op link.
By this time, Koch and Op link
had retained investment bankers and lawyers and had exchanged numerous tenn sheets, as well
as a draft merger agreement, setting
f01ih how Oplink would be acquired through a tender
offer. Senior managers
of the two companies had met numerous times, including to conduct
due diligence and to negotiate the price and terms
of the transaction. Op link was now
entertaining several offers from other companies and was pushing Koch to work quickly
toward a mid-November deal announcement.
67. On October 31, 2014, following several calls from Sonoiki to Kendricks and the
Middleman, the Kendricks Account purchased 27 Oplink call options with an expiration date
of January 2015 at  a cost of approximately $9,000. On November 13 and 17, 2014, the
Kendricks Account purchased 2,498 additional Oplink call options with expiration dates
of
December 2014 and January 2015 at a cost of approximately $438,000.
68. On November 19, 2014, after market close, Oplink announced that Koch would
be acquiring the company in a tender offer. The next day, November 20, Oplink's stock price
rose sharply and closed at $24.18, an increase
of approximately 14% over the stock's closing
price
of $21.25 on November 19.
69. On November
21 and 24, 2014, the Oplink call options in the Kendricks Account
were sold. In total, the Kendricks Account purchased Op link call options at a cost
of
approximately $446,000 and sold them for approximately $798,000, netting Kendricks a profit
of approximately $352,000.
15

70. The Defendants' illegal trading in Oplink call options generated returns of more
than 78% in less than one month.
THE SCHEME ENDS
71. In May 2015, Sonoiki's employment with the Investment Bank was terminated,
and
he lost access to confidential nonpublic deal infonnation.
72. In total, Kendricks received profits totaling approximately $1.2 million from the
scheme, and paid Sonoiki approximately $10,000 in cash for his tips, among other benefits,
including Eagles tickets and access to the perks
of Kendricks' celebrity.
CLAIMS FOR RELIEF
FIRST CLAIM
Fraud in Connection With the Purchase or Sale
of Securities
Violations
of Section lO(b) of the Exchange Act and Rule lOb-5 Thereunder
(Against Both Defendants)
73. The Commission realleges and incorporates by reference each and every
allegation in paragraphs I  through 72, inclusive, as
if they were fully set forth herein.
74. At the time that Sonoiki placed trades in the Kendricks Account and tipped
Kendricks and the Middleman as alleged above, Sonoiki was in possession
of material
nonpublic information about potential corporate transactions that he obtained because
of his
employment with the Investment Bank.
75. The Investment Bank treated information about these transactions as confidential,
including through policies and procedures designed to protect such infonnation and to prohibit
its employees from trading on such infmmation. Specifically, Sonoiki was prohibited,
by the
Investment Bank's internal compliance procedures, from trading on the basis
of material
nonpublic infonnation and trading in undisclosed, outside accounts.
16

7 6. Sonoiki knew or was reckless in not knowing that the infonnation he used to trade
in the Kend1icks Account or used to tip Kendricks and the Middleman was material and
nonpublic, and that
he owed the Investment Bank, its clients, and/or its clients' shareholders a
fiduciary duty,
or obligations arising from a similar relationship of trnst or confidence, to keep
the
infonnation confidential, and to refrain from trading on it or tipping others to trade.
77. Sonoiki breached a  fiduciary duty,
or a similar duty of trnst and confidence to the
Investment Bank, its clients, and/or its clients' shareholders, by trading in the Kend1icks
Account and tipping Kendricks and the Middleman to trade on the basis
of material nonpublic
infonnation
he obtained through his employment with the Investment Bank.
78. Sonoiki tipped Kendricks and the Middleman for benefits including cash
payments, football tickets, a luxury car service ride, and invitations to a nightclub event and the
set
of a music video.
79. Kendricks knew
or recklessly disregarded the infonnation that Sonoiki tipped to
him and to the Middleman for trading in the Kendricks Account was material and nonpublic.
80. Kendricks knew, should have known, recklessly disregarded
or consciously
avoided knowing that that the infonnation that Sonoiki used to place trades in
the Kendricks
Account or tipped to Kendricks and
the Middleman for trading in the Kendricks Account was
disclosed or misappropriated in breach of a fiduciary duty or obligation arising from a similar
relationship
of trnst or confidence.
81.
By engaging in the conduct described above, Defendants, knowingly or
recklessly, in connection with the purchase or sale of securities, directly or indirectly, by the
use of means or instrnmentalities of interstate commerce, or the mails, or the facilities of a
national securities exchange:
17

(a) employed devices, schemes, or miifices to defraud;
(b) made untrue statements
of material fact or omitted to state material facts
necessary in order to make the statements made, in the light
of the circumstances under which
they were made, not misleading; and/or
(c) engaged in acts, practices, or courses
of business which operated or would operate
as a fraud or deceit upon any person in connection with the purchase or sale of any security.
82. By engaging in the foregoing conduct, Defendants violated and, unless enjoined,
will continue
to violate, Section l0(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule !0b-
5 thereunder
[17 C.F.R. § 240.1 0b-5].
SECOND CLAIM
Fraud in Connection With a Tender Offer
Violations
of Section 14(e) of the Exchange Act and Rule 14e-3 Thereunder
(Against Both Defendants)
83. The Commission realleges and incorporates by reference each and every
allegation in paragraphs 1 through
72 inclusive, as if they were fully set forth herein.
84. The corporate transactions involving Move, Sapient, and Oplink were each
structured
as tender offers.
85. By September
8, 2014, the date of the first illegal trade by the Kendricks Account
in Move securities alleged herein, substantial steps
to complete News Corp's tender offer to
acquire Move had already been taken. Among other things, News Corp and Move had
exchanged drafts
of merger agreements detailing the tenns ofa tender offer and the companies'
respective boards had met
to review the potential transaction.
86. By October
6, 2014, the date of the first illegal trade by the Kendricks Account in
Sapient securities alleged herein, substantial steps
to complete Publicis' tender offer to acquire
18

Sapient had already been taken. Among other things, Publicis had made a proposal to purchase
Sapient in a tender offer, and senior managers
of the two companies had met to discuss the
offer.
87. By October 31, 2014, the date
of the first illegal trade by the Kendricks Account
in Oplink securities alleged herein, substantial steps to complete Koch's tender offer to acquire
Oplink had already been taken. Among other things, senior managers at Koch and Oplink had
met numerous times to discuss a potential tender offer, including to conduct due diligence and
to negotiate the price and terms
of the transaction.
88. Sonoiki obtained material nonpublic infonnation about the contemplated tender
offer transactions from his employer, the Investment Bank.
89. Sonoiki knew or had reason to know that this infonnation was nonpublic, and that
he had acquired it, directly or indirectly, from the offering person, the issuer
of the securities
sought or
to be sought by such tender offer, and/or any officer, director, partner, employee, or
other person acting on behalf of either the offering person or the issuer.
90. Sonoiki, directly or indirectly, placed, directed
or caused others to trade in the
secmities
of Move, Sapient and Oplink in the Kendricks Account after substantial steps had
been taken to commence tender offers for the shares
of these companies and before the tender
offers had been publicly announced.
91. Kendricks knew or had reason to know that the infonnation Sonoiki tipped him
regarding the Move, Sapient, and Oplink tender offers was nonpublic infonnation that had
been acquired from someone working on behalf
of the offeror or issuer.
92. At the time that the Kendricks Account traded in Move, Sapient, and Op link
securities
as described herein, Kendricks was in possession of material nonpublic information
19

regarding the Move, Sapient, and Op link tender offers that he knew or had reason to know was
nonpublic and acquired directly
or indirectly from someone working on behalf of the offeror or
issuer.
93. By reason
of the foregoing, defendants violated, unless enjoined, will continue to
violate, Section 14(e)
of the Exchange Act [15 U.S.C. § 78n(e)] and Rule 14e-3 thereunder [17
C.F.R.
§ 240.14e-3].
PRAYER FOR RELIEF
WHEREFORE, the Commission respectfully requests that this CoUJi enter a final
judgment:
I.
Permanently restraining and enjoining Sonoiki and Kendricks from, directly or
indirectly, violating Sections I0(b) and 14(e)
of the Exchange Act [15 U.S.C. §§ 78j(b) and
78n(e)] and Rules !0b-5 and 14e-3 thereunder [17 C.F.R.
§§ 240.!0b-5 and 240.14-e3];
II.
Ordering each Defendant to disgorge all ill-gotten gains or unjust enrichment
derived from the activities set forth in this Complaint, together with prejudgment interest
thereon;
III.
Ordering each Defendant to pay civil penalties pursuant to Section 21A of the
Exchange Act [15 U.S.C.
§ 78u-l];
20

IV.
Granting such other and further relief as this Court may detennine to be just and
necessary.
Dated:
~ / t"t (tz
Respectfully submitted,
/~·", . .,,--·.
"···//l::/4 ·1 ~2)
Jemrifer Chun B<1rr _{!'KBar No. 72961)
Kel .
1 son(PABarNo.91753)
Joseph G. Sansone
Rachael Clarke
Attorneys for Plaintiff
SECURITIES AND EXCHANGE
COMMISSION
1617 JFK Blvd., Suite 520
Philadelphia,
PA 19103
Telephone: (215) 597-3100
21

IN THE UNITED STATES DISTRICT COURT Y,/,,-
FOR THE EASTERN DISTRICT OF PENNSYLVANIA ~ 

SECURITIES AND EXCHANGE COMMISSION, 

Plaintiff, 

v. 

MARVIN MYCHAL-CHRISTOPHER KENDRICKS, 
a/k/a "Mychal Kendricks," and 

DAMILARE SONOIKI, 

Defendants. 

COMPLAINT 

Civil No: 
1s 

Plaintiff Securities and Exchange Commission (the "Commission") files this Complaint 

against defendants Marvin Mychal-Clnistopher Kendricks ("Kendricks") and Damilare 

Sonoiki ("Sonoiki") (collectively, "Defendants") and alleges as follows: 

SUMMARY OF THE ACTION 

1. This matter involves multiple instances of insider trading by Kendricks, a fonner 

linebacker for the Philadelphia Eagles of the National Football League, and Sonoiki, a fonner 

investment banking analyst at a large investment bank (the "Investment Bank"). From July 

2014 through November 2014, Sonoiki tipped Kendticks about at least four corporate 

acquisitions that the Investment Bank was advising in advance of those deals being announced 

to the public. Based on these tips, Kendricks purchased the securities of the companies that 

were about to be acquired and made approximately $1.2 million in illegal profits. 

2. Defendants used a variety of methods to conceal their communications. 

Kendricks and Sonoiki attempted to minimize telephone calls, employed coded language in 

text messages, and used other methods of communication that they apparently believed would 

not be uncovered, such as FaceTime. Kendricks gave cash kickbacks to Sonoiki for providing / 

the illegal tips. Kendricks also compensated Sonoiki by providing him with free tickets to ~ 

Case 2:18-cv-03695-GEKP Document 1 Filed 08/29/18 Page 4 of 24 



Eagles games, by paying for a luxury car service to drive Sonoiki approximately 180 miles to 

attend a nightclub event in Yark, Pennsylvania, and by inviting Sonoiki to the set of pop star 

Teyana Taylor's music video, in which Kendricks made a cameo appearance. 

3. As a result of the conduct described in this complaint, Defendants violated 

Sections lO(b) and 14(e) of the Securities Exchange Act of 1934 ("Exchange Act") [15 U.S.C. 

§§ 78j(b), 78n(e)] and Rules l0b-5 and 14e-3 thereunder [17 C.F.R. §§ 240.1 0b-5, 240.14e-3]. 

NATURE OF THE PROCEEDINGS AND REQUESTED RELIEF 

4. The Commission brings this action pursuant to Section 21 ( d) of the Exchange Act 

[15 U.S.C. § 78u(d)]. 

5. The Commission seeks permanent injunctions against Defendants enjoining them 

from engaging in the transactions, acts, practices, and courses of business alleged in this 

Complaint, disgorgement of all ill-gotten gains together with prejudgment interest, and civil 

penalties pursuant to Section 21A of the Exchange Act [15 U.S.C. § 78u-1]. The Commission 

finiher seeks any other relief as the Cami may deem just and appropriate. [15 U.S.C. § 

78u(d)(5)] 

JURISDICTION AND VENUE 

6. This Court has jurisdiction over this action pursuant to Sections 21 ( d) and ( e), 

21A, and 27 of the Exchange Act [15 U.S.C. §§ 78u(d) and (e), 78u-1, and 78aa]. 

7. Venue in this District is proper pursuant to Section 2l(d) and 27 of the Exchange 

Act [15 U.S.C. §§ 78u(d), 78u-l, and 78aa]. Among other things, certain of the acts, practices, 

and courses of business constituting the violations of the federal securities laws alleged herein 

occmTed within the Eastern District of Pennsylvania, including the opening of a trading 

account for Kendricks, illegal trading in that account, and kickback payments to Sonoiki. In 

addition, Kendricks resides in this District. 

2 

Case 2:18-cv-03695-GEKP Document 1 Filed 08/29/18 Page 5 of 24 



THE DEFENDANTS 

8. Kendricks, age 27, currently resides in Philadelphia, Pennsylvania and 

Cleveland, Ohio. From 2012 to 2018, Kendricks was a linebacker for the Philadelphia Eagles 

of the National Football League. 

9. Sonoiki, age 27, lives in California. From approximately June 2013 through June 

2015, Sonoiki lived in New York City and worked as an analyst in the Technology, Media, and 

Telecommunications ("TMT") group of the Investment Bank's investment banking division. 

While at the Investment Bank, Sonoiki held a Series 79 license as a registered investment 

banking representative. 

RELEVANT ENTITIES 

10. Investment Bank, a large investment banking, securities, and investment 

management finn, is headquaiiered in New York, New York. 

11. Sonoiki tipped Kendricks mate1ial nonpublic infmmation about transactions 

advised by the Investment Bank, including transactions involving the four publicly-traded 

companies identified below whose common stock was registered with the Commission 

pursuant to Section 12(b) of the Exchange Act. 

12. Compuware Corporation ("Compuware") was, at all relevant times, a 

Michigan corporation headquaiiered in Detroit that manufactured computer software. 

Compuware's common stock was traded on NASDAQ under the ticker symbol "CPWR." On 

September 2, 2014, Compuware announced that it was being acquired by the private-equity 

finn Thoma Bravo LLC ("Thoma Bravo") in a going-private transaction. The Investment 

Bank advised Compuware in connection with the transaction. 

13. Move, Inc. ("Move") was, at all relevant times, a Delaware corporation 

headquartered in Westlake Village, California that operated realtor.com and other real estate­

related websites. Move's common stock was traded on NASDAQ under the ticker symbol 

"MOVE." On September 30, 2014, Move announced that it was being acquired by News 

3 

Case 2:18-cv-03695-GEKP Document 1 Filed 08/29/18 Page 6 of 24 



Corporation ("News Corp") in a cash tender offer. The Investment Bank advised News Corp 

in connection with the transaction. 

14. Sapient Corporation ("Sapient") was, at all relevant times, a digital advertising 

finn incorporated in Delaware and headquartered in Boston, Massachusetts. Sapient's 

common stock was traded on NASDAQ under the ticker symbol "SAPE." On November 3, 

2014, Sapient announced that it was being acquired by the French adve1iising finn Publicis 

Groupe PLC ("Publicis") in a cash tender offer. The Investment Bank advised Sapient in 

connection with the transaction. 

15. Oplink Communications, Inc. ("Oplink") was, at all relevant times, a 

manufacturer of optical communications equipment incorporated in Delaware and 

headquartered in Fremont, California. Oplink was traded on NASDAQ under the ticker 

symbol "OPLK." On November 19, 2014, Oplink announced that it was being acquired by a 

subsidiary of Koch Industries, Inc. ("Koch") in a cash tender offer. The Investment Bank 

advised Koch in connection with the transaction. 

FACTS 
A. Sonoiki's Access to Material Nonpublic Information and the Investment 

Bank's Policies 

16. In July 2013, Sonoiki joined the Investment Bank as an analyst in the investment 

banking division's TMT group. As an analyst, Sonoiki had access to material nonpublic 

information about pending business transactions being advised by the TMT group. 

17. All personnel of the Investment Bank were subject to an internal compliance 

policy entitled, "Policies Regarding the Safeguarding of Confidential Information: the Chinese 

Wall and Other Infonnation Barriers" ("Investment Bank Confidential Information Policy"), 

which explicitly stated: "[ w Je regularly receive confidential infonnation as part of our nonnal 

client relationships. To breach a confidence or to use confidential information improperly or 

carelessly would be unthinkable." 

4 

Case 2:18-cv-03695-GEKP Document 1 Filed 08/29/18 Page 7 of 24 



18. The Investment Bank Confidential Information Policy prohibited finn employees 

from trading on the basis of material nonpublic information obtained in the course of their 

work: 
Confidential infonnation is infonnation that is not publicly available ... 

The finn takes any misuse, misappropriation, or improper 
dissemination of confidential infonnation seriously. Misuse and 
misappropriation of confidential information can violate contractual 
obligations, laws, rules, or regulations in various jurisdictions in which 
the firm does business and give rise to both civil liabilities and 
criminal penalties for the finn and for individual employees ... 

An employee who is aware of material nonpublic infonnation about an 
issuer or its securities is prohibited from: 

buying or selling the issuer's securities in personal (including 
certain related persons'), client, or finn accounts. 

- directing, soliciting, inducing, encouraging, or recommending the 
purchase or sale of those securities. 

19. All persom1el of the Investment Bank were also subject to an internal compliance 

policy entitled, "Personal Trading" ("Personal Trading Policy"), which generally prohibited 

employees from holding outside brokerage accounts. And even in those limited circumstances 

where an outside account was pennitted, the Investment Bank personnel had to disclose the 

outside account and also pre-clear all trades with the Investment Bank. The Personal Trading 

Policy further stated that trading by employees must "comply with all relevant regnlations, 

including, but not limited to, those regarding insider trading and manipulative practices[.]" 

20. All of the Investment Bank's employees were provided with training on the 

Investment Bank Confidential Infonnation Policy and Personal Trading Policy. 

5 

Case 2:18-cv-03695-GEKP Document 1 Filed 08/29/18 Page 8 of 24 



B. 

21. 

Kendricks and Sonoiki Hatch the Insider Trading Scheme 

In late 2013, Kendricks met Sonoiki at a party. After that first meeting, Sonoiki 

and Kendricks stayed in contact and exchanged investment and business ideas over the phone. 

During the summer of 2014, Sonoiki began providing material nonpublic infonnation about 

Investment Bank-advised deals to Kendricks. In return, Sonoiki received cash and other 

kickbacks from Kendricks. 

C. Sonoiki Tips Kendricks Information in Advance of Four Deal 
Announcements 

1. Insider Trading in Compuware 

22. In 2013, Compuware retained the Investment Bank to explore a variety of 

strategic alternatives for the company. By May 2014, the Investment Bank was actively 

involved in discussions with the private-equity finn Thoma Bravo about a potential transaction. 

23. In or around early July 2014, Sonoiki learned that the Investment Bank's TMT 

group was advising Compuware on a proposed transaction in which Thoma Bravo would take 

the company private. 

24. On July 14, 2014, Sonoiki texted Kendricks to tell him he had infonnation they 

could trade on: 

July 14 3:01 pm 

July 14 5:17 pm 

July 14 5:22 pm 

Sonoiki to Kendricks: hit my line soon as you 
can ... Got something for us 

Kendricks to Sonoiki: Yo i might head out 
there tonight 

Sonoiki to Kendricks: cool even better if we 
talk in person. got u 

25. Within hours of receiving Sonoiki's texts, Kend1icks traveled to New York City, 

and met Sonoiki during the early hours of July 15, 2014, outside the Investment Bank's 

downtown Manhattan headquarters. 

6 

Case 2:18-cv-03695-GEKP Document 1 Filed 08/29/18 Page 9 of 24 



26. On July 18, 2014, Kendricks paid $850 for a luxmy car service to drive Sonoiki 

approximately 180 miles from New York City to York, Pennsylvania so that Sonoiki could 

attend a nightclub event hosted by Kendricks. After the event, Sonoiki and Kendticks went to 

Kendricks' apartment in Philadelphia. 

27. Early the next morning, July 19, 2014, while Sonoiki was still at Kendricks' 

apartment, a brokerage account (the "Kendricks Account") was opened in Kend1icks' name at 

an online brokerage finn (the "Brokerage Finn"). Half an hour later, a note was created in 

Kendricks' phone containing Compuware's ticker symbol "CPWR." 

28. The following week, Kendricks funded the Kendricks Account with $80,000 from 

a managed account that he held at another brokerage finn. In an apparent attempt to avoid 

questions from his financial advisor who managed the account, Kendricks moved the money 

from his managed account to a checking account and only then to the Kendricks Account. 

29. When the money arrived in the Kendricks Account, Kendricks and Sonoiki used 

coded language in text messages to discuss it: 

July 26 7:39 a.m. 

July 26 7:00 p.m. 

July 26 7:42 p.m. 

Kendricks to Sonoiki: Yo so the 80 is there 

Sonoiki to Kendricks: nah you should keep number 95 
[the number on Kendricks' football jersey] 

Kendricks to Sonoiki: They said I couldn't get the 80 anyways 
only WR could get that number 

30. During the last few days of July 2014, the Investment Bank's work on the 

transaction to take Compuware private intensified. On July 29, the TMT team working on the 

deal provided a timeline to Thoma Bravo that contemplated a mid-August public 

announcement of the deal. That evening, Kendricks met Sonoiki outside the Investment 

Bank's lower Manhattan office, and the two spent the evening on the set of a Teyana Taylor 

7 

Case 2:18-cv-03695-GEKP Document 1 Filed 08/29/18 Page 10 of 24 



music video in which Kendricks made a cameo appearance. 

31. The next day, July 30, 2014, from his apmtment in New York City's financial 

district, Sonoiki purchased 1,000 Compuware call options with September expiration dates at a 

cost of approximately $22,000 in the Kendricks Account. 

32. A call option contract gives the owner the right to buy a specified amount of an 

underlying stock at a specified price (the "strike price"), before a specified date (the 

"expiration date"). The expiration date for all stock options expiring in a given month 

generally occurs on the third Friday of that month. A call option becomes more valuable as the 

price of the underlying stock increases relative to the strike price. A person who buys a call 

option typically believes that the value of the underlying stock will go up, and a person who 

buys a call option with a short-tenn expiration typically believes that the value of the 

underlying stock will go up in the short tenn. 

33. On August 1 and August 5, 2014, following numerous phone calls to Kendricks, 

Sonoiki, who was in New York City, purchased 1,400 Compuware call options with September 

expiration dates at a cost of approximately $30,000 in the Kendricks Account. 

34. On August 5, 2014, the Brokerage Firm notified Kendricks by e-mail that it had 

observed trading in the Kendricks Account from an internet protocol ("IP") address in New 

York City, suggesting that an unauthorized third-pmty might have access to his account. 

35. On August 15, 2014, in New York City, Sonoiki purchased 150 Compuware call 

options with November expiration dates at a cost of approximately $8,000 in the Kendricks 

Account. 

36. By late August, the impending transaction still had not been announced. 

Kendricks and Sonoiki exchanged a series of text messages in which Kendricks expressed 

concern about the trading and Sonoiki attempted to assuage Kendricks' fears: 

August 23 11 :09 p.m. Kendricks to Sonoiki: I'm getting scared Bruh 

August 23 11: 16 p.m. Sonoiki to Kend1icks: bro, don't get scared 

8 

Case 2:18-cv-03695-GEKP Document 1 Filed 08/29/18 Page 11 of 24 



August 27 I 0:44 a.m. Sonoiki to Kendricks: ear hustling hard, let's link up or hop on 
the phone 

August 27 2:14 p.m. Kendricks to Sonoiki: I'm getting kind if-y Bruh ... Bruh idk 

August 27 2:18 p.m. Sonoiki to Kendricks: I hear u. it's still happening, just taking 
longer than it was supposed to 

August 27 6:38 p.m. Kendricks to Sonoiki: I'm losing Bruh 

August 27 6:38 p.m. Sonoiki to Kendricks: chill, not losing 

August 28 12:28 a.m. Kendricks to 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 

August 31 6:34 p.m. Sonoiki to Kendricks: Haha .. .I should have some good news 
for you really soon. 

August 31 6:41 p.m. Sonoiki to Kendricks: ... don't wony really soon ... that's all I 
can say ... 

August 31 6:41 p.m. Kendricks to Sonoiki: ... got my hopes all up 

37. Late on the evening of Monday, September 1, 2014 (Labor Day), the Wall Street 

Journal published an article rep01iing that Compuware was in advanced talks with a private­

equity buyer about a going-private transaction and that a deal announcement was imminent. 

38. Early the following morning, Tuesday, September 2, 2014 at 7:22 a.m., Sonoiki 

sent a text message to a colleague at the Investment Bank who was working on the Compuware 

deal, which the bank had code-named Copper: "congrats on copper btw, just saw it hit the 

journal. What's the price?" His colleague responded: "Thank you! $10.92 ~25% premium." 

39. Later on September 2, 2014, after the market opened, Compuware's stock price 

rose sharply and closed at $10.59 per share, an approximately 13% increase over the closing 

price on the prior trading day, Friday, August 29, 2014. 

40. That same day, Sonoiki sold all of the Compuware call options he had purchased 

in the Kendricks Account. In total, Sonoiki purchased Compuware call options in the 

9 

Case 2:18-cv-03695-GEKP Document 1 Filed 08/29/18 Page 12 of 24 



Kendricks Account at a cost of approximately $60,000 and sold them for approximately 

$138,000, netting Kendricks a profit of approximately $78,000. 

41. The Defendants' illegal trading in Compuware options generated returns of more 

than 130% in a little over one month. On September 3, 2014, Kend1icks expressed his 

satisfaction through a text message to Sonoiki telling him: "[y]ou the man." 

42. Shortly after generating these illicit profits in the Kendricks Account, Sonoiki 

began seeking compensation from Kendricks. On September 4, 2014, Sonoiki sent a text 

message to Kendricks asking Kend1icks to "hook [him] up" with Eagles tickets. Sonoiki 

received the tickets the next day. 

43. Also on September 4, 2014, Sonoiki sent a series of text messages to Kend1icks in 

which he used coded language to reference the kickbacks Kendricks had agreed to pay him: 

"idk when next imma be able to see you ... so try to have the bread if you can ... the bread in nyc 

just isn't the same and I really like my cheesesteaks with the stuff you all have in Philly." 

44. As alleged in fmiher detail below, in late September and October 2014, 

Kendricks paid Sonoiki cash kickbacks totaling approximately $10,000 in exchange for his 

inside information. 

2. Insider Trading in Move 

45. By the first week of September 2014, the Investment Bank's TMT group was 

advising News Corp in its acquisition of the real-estate information company Move. The 

Investment Bank team was involved in late-stage negotiations, and expected a deal to be 

announced imminently. By this point, both News Corp and Move had hired lawyers and 

investment bankers, drafts of the merger agreement had been exchanged, conditions to a 

potential tender offer were being discussed between the paiiies, and the boards of News Corp 

10 

Case 2:18-cv-03695-GEKP Document 1 Filed 08/29/18 Page 13 of 24 



and Move had met to evaluate the terms of the offer. 

46. By September 4, 2014, a friend ofSonoiki's at the Investment Bank, who was 

working on the Move deal, had learned that the transaction would be announced on September 

8. On September 4, Sonoiki sent a text message to Kendricks: "call me asap." 

47. The Defendants took steps to minimize written communications: on September 5, 

Kendricks sent a text message to Sonoiki with a reminder: "don't write." Sonoiki responded 

"can you Facetime on your laptop I know." They also exchanged approximately 19 phone 

calls on September 4 and 5. 

48. On Friday, September 5, 2014, Kendricks called the Brokerage Finn in response 

to the earlier inquiries the finn had made about third-party access to the Kendricks Account. 

Because Kendricks had not responded timely to the Brokerage Finn's inquiries, the finn had 

placed a block on the account. Desperate to get the hold lifted, Kendricks told a Brokerage 

Finn representative on a recorded call: "I am trying get [the block] lifted before the market 

closes ... ! really need to do that." 

49. After Kendricks told the Brokerage Finn that he would be the only person with 

access to the Kendricks Account, the firm lifted the hold. The next trading day, Monday, 

September 8, 2014, the Kendricks Account purchased 224 Move call options with September 

and October expiration dates at a cost of approximately $20,000. 

50. From this point forward, Kendricks, who was in the midst of the NFL football 

season, enlisted a friend (the "Middleman") to place trades in the Kendricks Account using 

Kendricks' computer. Kendricks authorized and encouraged the Middleman to act on his 

behalf and trade for him based on tips from Sonoiki. On September 15, 2014, Kendricks texted 

the Middleman: "[d]elegation has been passed on to you," and, on September 21: "stop being 

11 

Case 2:18-cv-03695-GEKP Document 1 Filed 08/29/18 Page 14 of 24 



so scared of [Sonoiki] ... yeah it's all good ... Just talk to him." 

51. After Kendricks had enlisted the Middleman to assist him, Kendricks still 

remained involved in the scheme. Sonoiki sometimes called Kendricks directly, and the 

Middleman updated Kendricks when he had received new information from Sonoiki and when 

he was planning to trade on it. 

52. On or around September 15, 2014, the Investment Bank team working on the 

Move transaction learned that the deal would be announced soon. On September 15, Sonoiki, 

Kendricks, and the Middleman exchanged calls, and the Kendricks Account purchased 67 

Move call options with October expiration dates at a cost of approximately $9,000. The next 

day, September 16, the Kendiicks Account sold Move call options that were about to expire, 

and then purchased an additional 50 Move call options with October expiration dates at a cost 

of approximately $5,000. On September 17, the Kendricks Account purchased 32 additional 

Move call options with October expiration dates at a cost of approximately $3,000. 

53. On September 19, 2014, Sonoiki sent Kendricks a text message asking whether 

Kendricks could "hook [him] up with tix for [S]unday," whether he could see Kendricks on 

Sunday, and whether he could collect an "envelope" from Kendricks. That Sunday, Sonoiki 

and a friend attended the Eagles game against the Washington Redskins using tickets 

Kendricks provided to Sonoiki. After the game, Kendricks paid Sonoiki approximately $6,000 

in cash. 

54. On September 23, 2014, the Investment Bank team working on the Move 

transaction learned that the new target date for an announcement of the deal was the following 

Monday, September 30. Later that day, the Kendricks Account purchased 330 Move call 

options with October and November 2014 expiration dates at a cost of approximately $33,000. 

12 

Case 2:18-cv-03695-GEKP Document 1 Filed 08/29/18 Page 15 of 24 



55. On September 30, 2014, before the market opened, News Corp and Move 

announced that News Corp would acquire all outstanding Move shares in a tender offer priced 

at $21 per share. Following the September 30 announcement, Move's stock price rose sharply 

and closed at $20.96, an increase of approximately 3 7% over the stock's closing price of 

$15.29 on September 29. 

56. On October 2 and 3, 2014, the Move call options in the Kendricks Account were 

sold. In total, the Kendricks Account purchased Move call options at a cost of approximately 

$71,000, and sold them for approximately $350,000, netting Kendricks a profit of 

approximately $279,000. 

57. The Defendants' illegal trading in Move call options generated returns of more 

than 392% in less than one month. 

3. Insider Trading in Sapient 

58. By early October 2014, Sonoiki learned that the Investment Bank's TMT group 

was advising Sapient regarding a potential tender offer by Publicis to acquire the company. By 

this time, both Sapient and Publicis had engaged investment bankers and lawyers, Publicis had 

made a proposal to purchase Sapient in a tender offer, and senior managers of the two 

companies had met to discuss the offer, including the offer price. 

59. During the first week of October 2014, Sonoiki and the Middleman exchanged 

more than 40 phone calls. Following the phone calls, on October 6 and 7, the Kendricks 

Account purchased 1,523 Sapient call options with October 2014 and January 2015 expiration 

dates at a cost of approximately $93,000. 

60. On October 7, 2014, Sonoiki sent a text message to Kendricks, asking for four 

tickets to that Sunday's Eagles game. Sonoiki received the tickets from Kendricks, and, on 

13 

Case 2:18-cv-03695-GEKP Document 1 Filed 08/29/18 Page 16 of 24 



Sunday, October 12, used the tickets to attend the Eagles game against the New York Giants. 

61. On October 9, 2014, the Kendricks Account purchased 36 Sapient call options 

with October 2014 and January 2015 expiration dates at a cost of approximately $12,000. On 

October 14, 2014, the Kend1icks Account sold Sapient call options that were about to expire 

and purchased another 185 Sapient call options with November 2014 expiration dates at a cost 

of$41,000. 

62. In or around mid- to late October 2014, Sonoiki took a train to Philadelphia to 

pick up an additional cash kickback from Kendricks. Sonoiki met Kendricks and the 

Middleman at Philadelphia's 30th Street Station and received approximately $4,000 in cash. 

63. On November 3, 2014, Sapient announced that Publicis had agreed to acquire the 

company through a tender offer priced at $25 per share, a significant premium to the 

company's then-current stock price. That day, Sapient's stock ptice rose sharply and closed at 

$24.60, an increase of approximately 42% over the stock's closing price of $17.32 on October 

31. 

64. On November 6, the Sapient call options in the Kendricks Account were sold. In 

total, the Kendricks Account purchased Sapient call options at a cost of approximately 

$146,000 and sold them for approximately $635,000, netting Kendricks a profit of 

approximately $489,000. 

65. The Defendants' illegal trading in Sapient call options generated returns of more 

than 335% in approximately one month. 

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4. Insider Trading in Oplink 

66. By late October 2014, Sonoiki learned that the Investment Bank's TMT Group 

was advising Koch concerning a tender offer to acquire Op link. By this time, Koch and Op link 

had retained investment bankers and lawyers and had exchanged numerous tenn sheets, as well 

as a draft merger agreement, setting f01ih how Oplink would be acquired through a tender 

offer. Senior managers of the two companies had met numerous times, including to conduct 

due diligence and to negotiate the price and terms of the transaction. Op link was now 

entertaining several offers from other companies and was pushing Koch to work quickly 

toward a mid-November deal announcement. 

67. On October 31, 2014, following several calls from Sonoiki to Kendricks and the 

Middleman, the Kendricks Account purchased 27 Oplink call options with an expiration date 

of January 2015 at a cost of approximately $9,000. On November 13 and 17, 2014, the 

Kendricks Account purchased 2,498 additional Oplink call options with expiration dates of 

December 2014 and January 2015 at a cost of approximately $438,000. 

68. On November 19, 2014, after market close, Oplink announced that Koch would 

be acquiring the company in a tender offer. The next day, November 20, Oplink's stock price 

rose sharply and closed at $24.18, an increase of approximately 14% over the stock's closing 

price of $21.25 on November 19. 

69. On November 21 and 24, 2014, the Oplink call options in the Kendricks Account 

were sold. In total, the Kendricks Account purchased Op link call options at a cost of 

approximately $446,000 and sold them for approximately $798,000, netting Kendricks a profit 

of approximately $352,000. 

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70. The Defendants' illegal trading in Oplink call options generated returns of more 

than 78% in less than one month. 

THE SCHEME ENDS 

71. In May 2015, Sonoiki's employment with the Investment Bank was terminated, 

and he lost access to confidential nonpublic deal infonnation. 

72. In total, Kendricks received profits totaling approximately $1.2 million from the 

scheme, and paid Sonoiki approximately $10,000 in cash for his tips, among other benefits, 

including Eagles tickets and access to the perks of Kendricks' celebrity. 

CLAIMS FOR RELIEF 

FIRST CLAIM 

Fraud in Connection With the Purchase or Sale of Securities 
Violations of Section lO(b) of the Exchange Act and Rule lOb-5 Thereunder 

(Against Both Defendants) 

73. The Commission realleges and incorporates by reference each and every 

allegation in paragraphs I through 72, inclusive, as if they were fully set forth herein. 

74. At the time that Sonoiki placed trades in the Kendricks Account and tipped 

Kendricks and the Middleman as alleged above, Sonoiki was in possession of material 

nonpublic information about potential corporate transactions that he obtained because of his 

employment with the Investment Bank. 

75. The Investment Bank treated information about these transactions as confidential, 

including through policies and procedures designed to protect such infonnation and to prohibit 

its employees from trading on such infmmation. Specifically, Sonoiki was prohibited, by the 

Investment Bank's internal compliance procedures, from trading on the basis of material 

nonpublic infonnation and trading in undisclosed, outside accounts. 

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7 6. Sonoiki knew or was reckless in not knowing that the infonnation he used to trade 

in the Kend1icks Account or used to tip Kendricks and the Middleman was material and 

nonpublic, and that he owed the Investment Bank, its clients, and/or its clients' shareholders a 

fiduciary duty, or obligations arising from a similar relationship of trnst or confidence, to keep 

the infonnation confidential, and to refrain from trading on it or tipping others to trade. 

77. Sonoiki breached a fiduciary duty, or a similar duty of trnst and confidence to the 

Investment Bank, its clients, and/or its clients' shareholders, by trading in the Kend1icks 

Account and tipping Kendricks and the Middleman to trade on the basis of material nonpublic 

infonnation he obtained through his employment with the Investment Bank. 

78. Sonoiki tipped Kendricks and the Middleman for benefits including cash 

payments, football tickets, a luxury car service ride, and invitations to a nightclub event and the 

set of a music video. 

79. Kendricks knew or recklessly disregarded the infonnation that Sonoiki tipped to 

him and to the Middleman for trading in the Kendricks Account was material and nonpublic. 

80. Kendricks knew, should have known, recklessly disregarded or consciously 

avoided knowing that that the infonnation that Sonoiki used to place trades in the Kendricks 

Account or tipped to Kendricks and the Middleman for trading in the Kendricks Account was 

disclosed or misappropriated in breach of a fiduciary duty or obligation arising from a similar 

relationship of trnst or confidence. 

81. By engaging in the conduct described above, Defendants, knowingly or 

recklessly, in connection with the purchase or sale of securities, directly or indirectly, by the 

use of means or instrnmentalities of interstate commerce, or the mails, or the facilities of a 

national securities exchange: 

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(a) employed devices, schemes, or miifices to defraud; 

(b) made untrue statements of material fact or omitted to state material facts 

necessary in order to make the statements made, in the light of the circumstances under which 

they were made, not misleading; and/or 

(c) engaged in acts, practices, or courses of business which operated or would operate 

as a fraud or deceit upon any person in connection with the purchase or sale of any security. 

82. By engaging in the foregoing conduct, Defendants violated and, unless enjoined, 

will continue to violate, Section l0(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule !0b-

5 thereunder [17 C.F.R. § 240.1 0b-5]. 

SECOND CLAIM 

Fraud in Connection With a Tender Offer 
Violations of Section 14(e) of the Exchange Act and Rule 14e-3 Thereunder 

(Against Both Defendants) 

83. The Commission realleges and incorporates by reference each and every 

allegation in paragraphs 1 through 72 inclusive, as if they were fully set forth herein. 

84. The corporate transactions involving Move, Sapient, and Oplink were each 

structured as tender offers. 

85. By September 8, 2014, the date of the first illegal trade by the Kendricks Account 

in Move securities alleged herein, substantial steps to complete News Corp's tender offer to 

acquire Move had already been taken. Among other things, News Corp and Move had 

exchanged drafts of merger agreements detailing the tenns ofa tender offer and the companies' 

respective boards had met to review the potential transaction. 

86. By October 6, 2014, the date of the first illegal trade by the Kendricks Account in 

Sapient securities alleged herein, substantial steps to complete Publicis' tender offer to acquire 

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Sapient had already been taken. Among other things, Publicis had made a proposal to purchase 

Sapient in a tender offer, and senior managers of the two companies had met to discuss the 

offer. 

87. By October 31, 2014, the date of the first illegal trade by the Kendricks Account 

in Oplink securities alleged herein, substantial steps to complete Koch's tender offer to acquire 

Oplink had already been taken. Among other things, senior managers at Koch and Oplink had 

met numerous times to discuss a potential tender offer, including to conduct due diligence and 

to negotiate the price and terms of the transaction. 

88. Sonoiki obtained material nonpublic infonnation about the contemplated tender 

offer transactions from his employer, the Investment Bank. 

89. Sonoiki knew or had reason to know that this infonnation was nonpublic, and that 

he had acquired it, directly or indirectly, from the offering person, the issuer of the securities 

sought or to be sought by such tender offer, and/or any officer, director, partner, employee, or 

other person acting on behalf of either the offering person or the issuer. 

90. Sonoiki, directly or indirectly, placed, directed or caused others to trade in the 

secmities of Move, Sapient and Oplink in the Kendricks Account after substantial steps had 

been taken to commence tender offers for the shares of these companies and before the tender 

offers had been publicly announced. 

91. Kendricks knew or had reason to know that the infonnation Sonoiki tipped him 

regarding the Move, Sapient, and Oplink tender offers was nonpublic infonnation that had 

been acquired from someone working on behalf of the offeror or issuer. 

92. At the time that the Kendricks Account traded in Move, Sapient, and Op link 

securities as described herein, Kendricks was in possession of material nonpublic information 

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regarding the Move, Sapient, and Op link tender offers that he knew or had reason to know was 

nonpublic and acquired directly or indirectly from someone working on behalf of the offeror or 

issuer. 

93. By reason of the foregoing, defendants violated, unless enjoined, will continue to 

violate, Section 14(e) of the Exchange Act [15 U.S.C. § 78n(e)] and Rule 14e-3 thereunder [17 

C.F.R. § 240.14e-3]. 

PRAYER FOR RELIEF 

WHEREFORE, the Commission respectfully requests that this CoUJi enter a final 

judgment: 

I. 
Permanently restraining and enjoining Sonoiki and Kendricks from, directly or 

indirectly, violating Sections I0(b) and 14(e) of the Exchange Act [15 U.S.C. §§ 78j(b) and 

78n(e)] and Rules !0b-5 and 14e-3 thereunder [17 C.F.R. §§ 240.!0b-5 and 240.14-e3]; 

II. 

Ordering each Defendant to disgorge all ill-gotten gains or unjust enrichment 

derived from the activities set forth in this Complaint, together with prejudgment interest 

thereon; 

III. 

Ordering each Defendant to pay civil penalties pursuant to Section 21A of the 

Exchange Act [15 U.S.C. § 78u-l]; 

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IV. 

Granting such other and further relief as this Court may detennine to be just and 

necessary. 

Dated: ~ / t"t (tz 
Respectfully submitted, 

/~·", . .,,--·. 

"···//l::/4 ·1 ~2) 
Jemrifer Chun B<1rr _{!'KBar No. 72961) 
Kel . 1 son(PABarNo.91753) 
Joseph G. Sansone 
Rachael Clarke 

Attorneys for Plaintiff 
SECURITIES AND EXCHANGE 
COMMISSION 
1617 JFK Blvd., Suite 520 
Philadelphia, PA 19103 
Telephone: (215) 597-3100 

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