September 28, 2022

SEC announces insider trading settlements with two investment scheme participants

On September 27, 2022, the Securities and Exchange Commission announced that it settled insider trading charges against former investment banking analyst Damilare Sonoiki and Mark Wayne Ramsey, the friend and roommate of former professional football player Mychal Kendricks. The settlements were entered to resolve allegations related to their roles in an insider trading scheme involving the purchase of securities ahead of several impending corporate mergers.  

According to the SEC’s complaint filed on August 29, 2018, Sonoiki, who worked as an investment banking analyst for a large investment bank in New York at the time of the alleged offenses, provided Kendricks with material nonpublic information (“MNPI”) related to four corporate acquisitions that his employer was handling, between July 2014 and November 2014, in advance of a public announcement regarding the mergers.  According to the SEC’s complaint filed on May 21, 2019, Kendricks enlisted the help of Ramsey his close friend, roommate and personal assistant, to participate in the scheme after Kendricks was able to trade successfully using Sonoiki’s tip regarding the first company.  According to the 2019 complaint, Ramsey obtained MNPI from Sonoiki regarding three additional corporate acquisitions and placed illegal trades using Kendricks’ account before the mergers were announced publicly.  When Ramsey joined the scheme, the three also allegedly discussed the importance of keeping the trades small and the importance of communicating about the scheme using video rather than audio calls, in an effort to reduce the risk of detection.  According to the SEC, Kendricks realized approximately $1.2 million in illegal profits from the scheme, and, in exchange for the tips, allegedly paid Sonoiki approximately $10,000 in cash and provided him with football tickets and other perks associated with Kendricks’ celebrity status.  In exchange for Ramsey’s assistance, Kendricks allegedly paid a $15,000 debt for Ramsey and funded several business projects.

The SEC’s complaints, which were filed in the Eastern District of Pennsylvania, charged Sonoiki, Kendricks and Ramsey with violating the antifraud provisions of Section 10(b) and 14(e) of the Securities Exchange Act of 1934 and Rules 10b-5 and 14e-3 thereunder.  On August 30, 2022, the court entered final judgments against Sonoiki and Ramsey, who both consented to the entry of final judgments against them and were permanently enjoined from committing further anti-fraud violations. Sonoiki was also ordered to pay a civil penalty of $15,000.  The SEC also reports that, on September 19, 2022, Sonoiki consented to be barred from “association with any broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization or from participating in any offering of a penny stock.”  In 2020, the court entered a final judgment on consent against Kendricks permanently enjoining him from committing further anti-fraud violations, and ordering disgorgement of nearly $1.2 million.

The US Attorney’s Office for the Eastern District of Pennsylvania also contemporaneously filed parallel criminal charges against the three defendants when the SEC complaints were filed.  In 2018, Sonoiki and Kendricks pleaded guilty to insider trading and conspiracy charges. In July 2021, Kendricks was sentenced to 1 day in prison, 3 years of supervised release and was ordered to pay a $100,000 fine, while Sonoiki received 1 month in prison, 3 years of supervised release and was ordered to pay a $5,000 fine.  In March 2022, a federal jury found Ramsey guilty of securities fraud and conspiracy, and he was sentenced to 60 days in prison, 3 years of supervised release and was ordered to pay a $5,000 fine for his role in the scheme.