Kendricks- Prisoner’s Dilemma for Conspiracy to Commit Securities Fraud
This article discusses how NFL linebacker Mychal Kendricks was charged with insider trading. The U.S. Attorney William M. McSwain, of the Eastern District of Pennsylvania, has asserted that Kendricks and former investment banker, Damilare Sonoiki, conspired to buy and sell publicly traded securities based on upcoming investment bank mergers. By purchasing call options in companies that would later be valued at a higher rate, Kendricks was making a profit at a range that signaled that he may have access to non-public information. For these tips on investment bank mergers, Kendricks rewarded Sonoiki monetarily. Additionally, if the federal authorities are able to obtain a key testimony from a cooperating witness such as someone looking to avoid facing charges themselves, then the prosecutors may gain crucial information to the conspiracy to commit securities fraud by Kendricks and Sonoiki.
This article is relevant to class as it discusses the “prisoner’s dilemma.” “The article defines this as a situation in which each conspirator believes that if each remains silent, none will be convicted.” Yet the article also acknowledges that if any person involved in the conspiracy cuts a deal with the government, then the others are more likely to be convicted. The game is increasingly complicated by the potential to introduce new players with relevant information to the case.
Based on the current known players in the game of sentencing for conspiracy to commit securities fraud, the players Kendricks and Sonoiki face the below responses. We can use this chart to determine a situation that is the best response given the existing information about what players will choose to do. It can be argued that in Kendricks’ admitting to wrongdoing, he is willing to cooperate. Since it appears that Kendricks will cooperate with authorities, the best response of Sonoiki would be to cooperate with authorities.
| Prisoner’s Dilemma for Conspiracy to Commit Securities Fraud
* |
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| Kendricks | |||
| Sonoiki | Non-Cooperative | Cooperative | |
| Non-Cooperative | -1,-1 | -5,0 | |
| Cooperative | 0,-5 | -3,-3 | |
*years sentenced are arbitrary and should not be reflective of sentencing for the crime of conspiracy to commit securities fraud.